Federal Open Market Committee Meeting - FOMC Meeting


DEFINITION of 'Federal Open Market Committee Meeting - FOMC Meeting'

The meeting of the Federal Open Market Committee (FOMC) that occurs eight times a year. In the FOMC meeting, the FOMC, consisting of 12 members, determines near-term monetary policy. The changes that are decided on, are announced immediately after the FOMC Meeting.

BREAKING DOWN 'Federal Open Market Committee Meeting - FOMC Meeting'

Because the Fed determines interest rate policy at the FOMC meeting, the announcement following this meeting is very important. Speculation often occurs weeks in advance, about what will happen with interest rates following the meeting. The minutes of this meeting are released three weeks after the gathering. This is a vast improvement over the six to eight week lag that existed prior to December 14, 2004.

The expected change in rate (if any), is often priced into the markets prior to the announcement, which can cause drastic market action should the announcement be different from what was expected. Interest rate cuts can stimulate the economy, but at the same time, reduce the value of the currency.

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  1. What is affected by the interest rate risk?

    Interest rate risk is the risk that arises when the absolute level of interest rates fluctuate. Interest rate risk directly ... Read Full Answer >>
  2. What is GDP and why is it so important to investors?

    The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents ... Read Full Answer >>
  3. Who determines interest rates?

    In countries using a centralized banking model, interest rates are determined by the central bank. In the first step of ... Read Full Answer >>
  4. How do open market operations affect the U.S. money supply?

    Formulating a country's monetary policy is extremely important when it comes to promoting sustainable economic growth. More ... Read Full Answer >>
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