Federal Open Market Committee (FOMC): Definition And What It Does Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: Andrew Harrer/Bloomberg via Getty Images March 07, 2022 Sarah Foster covers the Federal Reserve, the U.S. economy and economic policy. She previously worked for Bloomberg News, the Chicago Tribune and the Chicago Daily Herald. David Schepp is a wealth editor for Bankrate, focusing on deposits and consumer banking content. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Here is a list of our . Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Meet the faces behind the U.S. economy. The , the U.S. central bank, is tasked with maintaining a stable and sound financial system — most notably by raising or lowering interest rates at (what’s typically) eight meetings a year. But those decisions are made by a voting body: the Federal Open Market Committee (FOMC), all of which . Here’s what the FOMC is, who’s on it and why it matters. What is the FOMC
The FOMC is the group of Fed officials given the sole authority of voting on whether to raise, lower or maintain interest rates. The FOMC, specifically, is one of three branches within the Federal Reserve System (the FOMC, the board of governors and the 12 regional reserve banks). What does the FOMC do
Most notably, the FOMC decides what to do with the Fed’s benchmark interest rate — the — which influences other borrowing costs throughout the financial system, such as and (HELOC) rates, as well as yields on and . Fed officials consider a — stable prices and maximum employment — when deciding to raise, lower or maintain interest rates. The FOMC also participates in what’s called “economic go-rounds” during meetings, where each official shares what’s happening in their individual regions. After each Fed meeting, the FOMC issues a policy statement that explains what officials decided to do and why. Three weeks after each meeting, records of that meeting known as minutes are published. Complete transcripts featuring word-for-word dialogue that took place during FOMC meetings are published five years later. Under Fed Chair Jerome Powell’s tenure, the FOMC also moved toward holding a press conference after each meeting, hosted by Powell, rather than quarterly. Every other meeting, Fed officials submit individual economic forecasts for employment, gross domestic product (GDP) and inflation. They’ll also mark down their projections for where interest rates are likely to go in the years ahead, in a chart known as the . Both of those reports make up the “.” But the FOMC decides on more than just adjusting interest rates. It also conducts open market operations, where it buys and sells securities. That process, formally called large-scale asset purchases but more colloquially known as , can influence longer-term interest rates, while also expanding or contracting the money supply. Who is on the FOMC
The FOMC is made up of 12 members (though, right now, there are four vacancies): the seven board of governors, the president of the regional New York Fed and four other Reserve Bank presidents located throughout the country. The board and the New York Fed president have permanent voting positions, while the four regional bank presidents rotate on and off the board annually. The officials are: Jerome Powell, board of governors, chair pro-tempore Christopher Waller, board of governors Michelle Bowman, board of governors Lael Brainard, board of governors John Williams, president and CEO, New York James Bullard, president and CEO, St. Louis Esther George, president and CEO, Kansas City Loretta Mester, president and CEO, Cleveland Additionally, five other officials also serve as alternates, four of which are also regional reserve bank presidents not on the current voting body, and then the first vice president of the New York Fed. They’re there in case any Fed officials have to miss a meeting. They are: Meredith Black, interim president, Dallas Charles Evans, president and CEO, Chicago Patrick Harker, president and CEO, Philadelphia Neel Kashkari, president and CEO, Minneapolis Naureen Hassan, first vice president, New York So far in 2022, the only alternate who’s been activated is Harker, who’s filling a spot normally assumed by the Boston Fed president. Eric Rosengren, who formerly headed the first regional reserve bank district and was under fire for trading millions of dollars worth of individual securities in 2020, resigned Sept. 30, . Susan Collins, an economics professor at the University of Michigan, is slated to . Even those who don’t have a vote still have some influence. All 12 regional reserve bank presidents attend meetings, even though four of them aren’t on the voting board nor an alternate. They participate in policy discussions and contribute to the assessment of the economy just as much as other voting members in attendance, informing everyone on how well their regions are performing. The chair of the board serves as the chair of the broader FOMC, a position currently served by Jerome Powell (who’s awaiting confirmation for his second term). Other former chairs include Janet Yellen, Ben Bernanke and Alan Greenspan. When does the FOMC meet
The FOMC typically meets about every six weeks, culminating in about eight meetings a year. Broader economic events could, however, prompt the Fed to meet outside of its original schedule. That was the case during the financial crisis of 2008, as well as the coronavirus crisis in March 2020. Officials voted to reduce interest rates at , bringing borrowing costs down to near-zero percent for the first time since the financial crisis. Who decides who is on the FOMC
The Federal Reserve System is designed to be independent of government, though not independent from government. The Fed’s board ultimately reports to Congress. Members are appointed by the president, approved by the Senate Banking Committee and then the broader Senate before coming to the Fed. The regional reserve bank presidents, on the other hand, have more separation from Congress. A board of directors at each reserve bank, made up of local business contacts, leaders and experts, decide who ultimately serves at the helm. They’re then approved by the Fed’s board of governors. Interest rate decisions The influence of doves hawks and centrists
Though the Fed has to come to a majority consensus for most of its decisions, lots of attention is focused on who’s on the Fed, given the influence the board has and the impact of its decisions. Most Fed watchers group officials into three categories: doves, hawks and centrists. Doves tend to prefer keeping policy accommodative, with some experts pointing out that they tend to be more concerned with letting the labor market run hot. Hawks, meanwhile, are more of the sticklers, fixed on the idea that too-loose policy could lead to asset bubbles or inflation. If a voting board tends to be made up of more dovish members, it might indicate a lower interest rate policy in the year ahead. If that same voting body is more primarily composed of hawks, they might be more willing to raise interest rates at a faster pace. Ultimately, the Fed is said to be “data dependent,” deciding what to do with interest rates based on employment, inflation and growth data. Bottom line
The FOMC’s decisions arguably impact your wallet more directly — and more quickly — than any other policymaker in Washington. What it decides to do can steer the broader economy away from recessions, while also influencing how much you pay to borrow and what you’re paid to save. “Decisions on monetary policy are made by committee,” says Greg McBride, CFA, Bankrate chief financial analyst. “While the Fed chair is the recognizable face of the Federal Open Market Committee, they do not single-handedly make the decisions affecting the economy but try to reach a consensus among the committee.” Learn more
SHARE: Sarah Foster covers the Federal Reserve, the U.S. economy and economic policy. She previously worked for Bloomberg News, the Chicago Tribune and the Chicago Daily Herald. David Schepp is a wealth editor for Bankrate, focusing on deposits and consumer banking content. Related Articles