Federal Open Market Committee (FOMC) Meetings: What They Are and How They Work

Key takeaways

• The FOMC is the Federal Reserve committee that directs open market operations to implement U.S. monetary policy.
• It has 12 voting members: the seven Board of Governors, the president of the Federal Reserve Bank of New York, and four rotating Reserve Bank presidents.
• The FOMC meets regularly (eight scheduled meetings per year) and its decisions influence the federal funds rate and, through that, other interest rates and economic activity.

What the FOMC is

The Federal Open Market Committee (FOMC) is the Federal Reserve’s primary body for setting monetary policy through open market operations—buying and selling U.S. government securities. Its actions affect the supply of reserves in the banking system and help determine the federal funds rate, which in turn influences short‑ and long‑term interest rates, credit conditions, inflation, employment, and economic growth.

Composition and voting

• 7 members of the Board of Governors (appointed by the President and confirmed by the Senate).
• 5 Federal Reserve Bank presidents with voting rights: the permanent president of the New York Fed and four other Reserve Bank presidents who serve one-year rotating terms.
• Other Reserve Bank presidents attend meetings, participate in discussions, and provide regional economic perspectives, but do not vote when not in a rotating voting seat.

The rotation of voting seats is organized so that different regional Reserve Banks are represented over time, ensuring geographic balance in perspectives.

Meeting cadence and process

• The FOMC holds eight regularly scheduled meetings per year and can convene additional meetings if needed.
• Meetings are closed to the public but are followed by policy statements, and minutes are released with a lag to explain deliberations and rationale.
• At each meeting members review economic and financial conditions, discuss forecasts, and decide on the appropriate stance of monetary policy.
• Decisions typically set a target or target range for the federal funds rate and direct open market operations to achieve that target.

How decisions are implemented

Primary policy tools:
* Open market operations (OMOs): buying securities injects reserves and eases monetary conditions; selling securities drains reserves and tightens conditions. The New York Fed’s trading desk executes these operations on behalf of the FOMC and maintains the System Open Market Account (SOMA).
* Discount rate and reserve requirements: set by the Board of Governors; these tools complement OMOs but are administratively distinct.

SOMA and the New York Fed
* Securities acquired in OMOs are held in the System Open Market Account, which has domestic and foreign portfolios.
* The Federal Reserve Bank of New York conducts the market transactions mandated by the FOMC and manages the day‑to‑day implementation of policy.

Transmission to the economy

Changes in the federal funds rate influence other short‑term interest rates directly and longer-term rates indirectly. These rate movements affect borrowing costs for consumers and businesses, asset prices, exchange rates, credit availability, investment decisions, employment, and ultimately economic output and inflation.

Policy framework and goals

Congress has charged the Fed with promoting maximum employment, stable prices, and moderate long‑term interest rates. The FOMC’s longer‑run strategy includes an explicit inflation objective—commonly a 2% inflation target—which guides longer‑term judgment about the appropriate stance of policy.

Common questions

Is the FOMC the same as the Fed?
* No. The FOMC is a committee within the Federal Reserve System focused on open market operations and the federal funds rate; the Board of Governors and regional Reserve Banks are other parts of the Fed system with distinct responsibilities.

How often does the FOMC meet?
* Eight scheduled meetings per year, with additional emergency meetings as needed.

Are FOMC meetings public?
* Meetings are not open to the public. Policy statements and minutes are published after meetings to communicate decisions and reasoning.

Bottom line

The FOMC is the Fed’s central policy committee for managing the nation’s monetary stance via open market operations. Its decisions about the federal funds rate and securities transactions shape short‑term liquidity, influence broader interest rates and financial conditions, and aim to steer the economy toward stable prices and maximum sustainable employment.