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Glossary

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Federal Open Market Committee (FOMC)

The Federal Open Market Committee is the most important gear in the Federal Reserve Systems monetary policy-making machine. Made up of seven members of the Board of Governors and five Reserve Bank Presidents, the FOMC is responsible for regulating money supply and credit policies in the U.S. The Committee is responsible for making decisions to increase or decrease interest rates, indicating whether the Federal Reserve is seeking to tighten the money supply to reduce inflation or loosen it to stimulate the economy. The Committee does this through open market operations or purchases and sales of U.S. Government and Federal Agency Securities. Actions taken by the FOMC can have a significant impact on not only U.S. interest rates, but also of those abroad. Meetings are held eight times per year.