Open Market Committee


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Federal Open Market Committee

An arm of the Federal Reserve System charged with setting standards for open market operations. That is, the FOMC sets the monetary policy for the United States by buying and selling securities and setting key interest rates, especially the rate at which banks lend each other money for overnight loans. Selling government securities and raising interest rates are how the Federal Reserve reduces the amount of money in the economy; these tools are used to slow unsustainable growth and to curb inflation. Buying securities and lowering interest rates increase the amount of money in the economy and are used to spur growth.

The Committee meets eight times per year and consists of the seven members of the Federal Reserve Board of Governors and five of the 12 Reserve Bank presidents. Four of the five presidents alternate for one-year terms, while the President of the New York Federal Reserve serves ex officio. It operates independently, although the Chairman of the Federal Reserve is required to appear before Congress at intervals. Somewhat controversially, its meetings are conducted in secret.

Open Market Committee

References in periodicals archive ?
The Open Market Committee consists in 1989 of the seven governors of the Federal Reserve Board and five of the 12 district bank presidents.
The Federal Open Market Committee decided on May 3, 2005, to raise its target for the federal funds rate 25 basis points, to 3 percent.
The Federal Reserve Board and the Federal Open Market Committee, released on May 24, 2005, the minutes of the Committee meeting held on May 3, 2005.
On December 14, 2004, the Federal Open Market Committee (FOMC) decided to move up the publication of its minutes to three weeks after the end of each meeting.
The Federal Open Market Committee decided on February 2, 2005, to raise its target for the federal funds rate 25 basis points, to 2 1/2 percent.