Federal Open Market Committee

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Federal Open Market Committee (FOMC)

The body that is responsible for setting the interest rates and credit policies of the Federal Reserve System.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Federal Open Market Committee (FOMC)

A policy-making committee within the Federal Reserve that has the responsibility for establishing and carrying out open-market operations. Policies and decisions of the committee have a substantial impact on interest rates and the securities markets. The FOMC is composed of the 7 members of the Board of Governors of the Federal Reserve System and presidents from 5 of the 12 Federal Reserve Banks. Also called Open Market Committee.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Federal Open Market Committee (FOMC).

The Open Market Committee (FOMC) of the Federal Reserve Board meets eight times a year to evaluate the threat of inflation or recession.

Based on its findings, the 12-member FOMC determines whether to change the discount rate or alter the money supply to curb or stimulate economic growth.

For example, the FOMC may raise the discount rate, which the Federal Reserve charges member banks to borrow, with the goal of tightening credit and limiting inflationary growth. It may lower rates to encourage borrowing and economic expansion. Or it may take no action.

Changes in the discount rate result in virtually immediate changes in the short-term rates that banks charge consumers -- and each other -- to borrow.

The Federal Reserve Bank of New York implements FOMC decisions to alter the money supply. It buys government securities to put more money into circulation and loosen credit or it sells securities to take money out of the market and tighten credit.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
"But in the Gulf, we are not expecting capital outflows as sovereign balance sheets are relatively strong, and this is an environment where oil prices have been rising, allowing governments to ease up on austerity." The Federal Open Market Committee raised the target range for the federal funds rate from 1.75 to 2 percent on Wednesday, in the seventh increase of the current cycle and the second this year.
The Federal Open Market Committee raised the rate up to 0.25-0.5 percent per annum from the record low level of 0-0.25 percent in December 2015 following the meeting for the first time since June 29, 2006.
At a recent Treasury Committee hearing the Bank was asked to consider making and keeping full transcripts with a view to releasing them after a number of years, transcripts of monetary policy discussions in some other central banks are, or will be, published, with those of the Federal Open Market Committee in the United States being published after five years and in the euro area, records of ECB Governing Council meetings will be published after thirty years.
The powerful (http://www.federalreserve.gov/newsevents/press/monetary/20130501a.htm) Federal Open Market Committee of the U.S.
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Fig 1,2, 5, 6, 3, 4, The Federal Open Market Committee voted unanimously today to lower the fed funds target 50 basis points to 4.75 percent.
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The document also contains a question and answer (Q&A) section which discusses the Federal Open Market Committee (FOMC), the U.S.

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