Federal Open Market Committee. A 12-member committee which sets credit and interest rate policies for the Federal Reserve System. This committee consists of 7 members of the Board of Governors, and 5 of the 12 Federal Reserve Bank Presidents. This group, headed by the Chairman of the Federal Reserve Board, sets interest rates either directly (by changing the discount rate) or through the use of open market operations (by buying and selling government securities which affects the federal funds rate). The discount rate is the rate at which the Federal Reserve Bank charges member banks for overnight loans. The Fed actually controls this rate directly, but it tends to have little impact on the activities of banks because these funds are available elsewhere. This rate is set during the FOMC meetings by the regional banks and the Federal Reserve Board. The federal funds rate is the interest rate at which banks loan excess reserves to each other. While the Fed can't directly affect this rate, it effectively controls it through the way it buys and sells Treasuries to banks. There are 8 scheduled FOMC meetings during the course of each year. However, when circumstances dictate, the Fed can make inter-meeting rate changes.
Related information about FOMC:
- Federal Open Market Committee - Wikipedia, the free encyclopedia
The Federal Open Market Committee (FOMC), a committee within the Federal Reserve System, is charged under United States law with overseeing the nation's ...
- FOMC Meeting - Board of Governors of the Federal Reserve System
Oct 24, 2012 ... Meeting calendars, statements, and minutes (2007-2013). The FOMC holds eight regularly scheduled meetings during the year and other ...
- FRB: Federal Open Market Committee
May 30, 2012 ... Schedule and minutes of Federal Open Market Committee from the Federal Reserve Board.
- Federal Open Market Committee (FOMC) Definition | Investopedia
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