The FOMC (Federal Open Market Committee) is a body of what is commonly referred to as the Fed, the US central bank. Put simply, the FOMC is just a committee. It is where the most important monetary policy decisions are made: the FOMC is responsible for the US central bank’s open market operations, i.e. the central bank’s purchases and sales of Treasury bills, which will impact the main policy rate. Ultimately, it is at FOMC meetings that major monetary policy decisions are made, such as the level of the main policy rate.
The FOMC generally meets every six weeks. These meetings are closely followed by the international press, as they are directly followed by the announcement of monetary policy decisions. Three weeks after the meeting, what was said within the committee is revealed in the famous FOMC minutes (available here).
The FOMC has 12 members: the seven members of the Board of Governors, the president of the New York Fed, and four presidents of the remaining 11 « regional » central banks. The Board of Governors therefore has significant power. This Board also has separate decision-making power: it has the final say on the level of reserve requirements and the discount rate (see this link on complementarity with FOMC decisions).
Julien P.
Notes:
[1] « The Fed » does not actually refer to a separate entity but to a group of several central banks. The group consists of the 12 US Federal Reserve Banks and is commonly referred to as « the Fed » as an abbreviation for « Federal Reserve System. »
