FOMC

What Is the FOMC?

The Federal Open Market Committee is the monetary policy arm of the Federal Reserve System. Its twelve voting members — seven Fed governors plus five of the twelve regional Fed presidents on a rotating basis — meet roughly every six weeks to vote on the federal funds rate and issue guidance about the future path of policy.

Meeting Structure

Each FOMC meeting spans two days. At the conclusion, the Committee releases:

1. The rate decision: The new target range for the fed funds rate
2. The policy statement: A nuanced description of economic conditions and the rationale for the decision
3. The Summary of Economic Projections (SEP): Issued quarterly — includes GDP, inflation, and unemployment forecasts plus the dot plot
4. Chair press conference: Jerome Powell (or successor) takes questions, providing critical colour

Why Markets Hang on Every Word

FOMC meetings are among the highest-volatility events in financial markets. Even when the decision matches expectations, subtle changes in language ("remain attentive" vs "closely monitoring") move bonds, equities, and currencies. The press conference is often more important than the written statement.

The Dot Plot

The SEP includes a "dot plot" — a chart showing each FOMC member's anonymous projection for where the fed funds rate should be at year-end for the next three years and in the long run. Markets watch for shifts in the median dot as a signal of the Committee's intended rate path.

Blackout Period

The Fed imposes a communications blackout on FOMC members starting the Saturday before each meeting through the Thursday after. Statements made outside this window are heavily scrutinised for policy signals.