FOMC

Definition

Federal Open Market Committee. A 12-member committee which sets credit and interest rate policies for the Federal Reserve System. This committee consists of 7 members of the Board of Governors, and 5 of the 12 Federal Reserve Bank Presidents. This group, headed by the Chairman of the Federal Reserve Board, sets interest rates either directly (by changing the discount rate) or through the use of open market operations (by buying and selling government securities which affects the federal funds rate). The discount rate is the rate at which the Federal Reserve Bank charges member banks for overnight loans.
The Fed actually controls this rate directly, but it tends to have little impact on the activities of banks because these funds are available elsewhere. This rate is set during the FOMC meetings by the regional banks and the Federal Reserve Board. The federal funds rate is the interest rate at which banks loan excess reserves to each other. While the Fed can't directly affect this rate, it effectively controls it through the way it buys and sells Treasuries to banks. There are 8 scheduled FOMC meetings during the course of each year. However, when circumstances dictate, the Fed can make inter-meeting rate changes.

Use FOMC in a sentence

We needed to consult the FOMC because they had answers for us and we needed them very desperately right now.

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The FOMC set the rates and then we informed our financial manager of the situation so we could proceed strategically.

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The new financial experts adhere to all of the standards set by the FOMC, they are ensuring that the country is able to maintain a healthy Federal Reserve System and also allow it to grow.

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