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.
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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.
References in periodicals archive ?
"The Federal Reserve will provide reserves as necessary through open market operations to promote trading in the federal funds market at rates close to the Federal Open Market Committee's target rate of 5 1/4 percent.
The Federal Open Market Committee decided on November 1, 2005, to raise its target for the federal funds rate 25 basis points, to 4 percent.
In a September paper for the Shadow Open Market Committee, a group of monetarist-oriented Federal Reserve watchers, Levy notes that progress in reducing the deficit has been largely "illusory" because the basic structural problems with the budget remain intact.
* The Federal Open Market Committee will begin its two-day policy meeting today.
Minutes from the meeting of the Federal Open Market Committee on November 7-8 state: "Consistent with their judgment that a gradual approach to policy normalization remained appropriate, almost all participants expressed the view that another increase in the target range for the federal funds rate was likely to be warranted fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations.
'The BAP open market committee is reviewing the matter to establish if there is any impact to the market and will recommend to the BAP board and president corresponding actions necessary,' the group's open market committee chair and HSBC country chief Wick Veloso said.
The Federal Open Market Committee meeting on Wednesday was the highlight of this week.
"Information received since the Federal Open Market Committee met in March suggests that economic activity has been expanding at a moderate pace ...
The interest-setting Federal Open Market Committee said that core inflation remained somewhat elevated, but added that inflation pressures were likely to moderate over time.
The Federal Reserve Board and the Federal Open Market Committee released on August 30, 2005, the minutes of the Committee meeting held on August 9, 2005.
On Tuesday, September 21, the Federal Open Market Committee raised short-term interest rates yet again from 1.5% to 1.75%, an increase that hasn't made the real estate market even flinch.
Greenspan dodged the thrust by claiming the forecasts were from individual members of the Federal Open Market Committee. "That is not the staff forecast, as such, which we produce separately," the Fed chair man replied deftly.