The FOMC determines monetary policy for the United States. It is composed of the Board of Governors of the Federal Reserve System and the presidents of the 12 Federal Reserve Banks. The FOMC meets regularly to set short-term interest rates and decide other economic policies based on reports on employment, inflation, and growth. It seeks to promote maximum employment and stable prices. In its most recent meeting, the FOMC voted to maintain near-zero interest rates given moderate economic expansion and below-target inflation.

1. By
Mehwash Sheikh
Under The Guidance
Of
Mr. Rahul Dadhich

2. Introduction:
• FOMC stands for Federal Open Market Committee.
• FOMC is the branch of United States Federal Reserve (FED) that
determines the direction of monetary policy.
• It is responsible for formulation of a policy designed to promote
prices and economic growth. Simply put, the FOMC manages the nation’s
money.

3. History of FOMC:
• The Federal Open Market Committee was formed by the Banking Act
and did not include voting rights for the Federal Reserve Board of Governors.
• It was formed to conducts monetary policy to achieve its macroeconomic objective
of maximum employment and stable prices, & to adjust the level of short-term
interest rates in response to change in economic outlook.

4. Structure of FOMC :
The FOMC is compose of
1. Board of governors: 7 members appointed by the president and approved by
the senate.
2. The president of the Federal Reserve Bank of New York.
3. 4 of the other 11 Federal Reserve Banks presidents (served on rotating basis)
The president of the Federal Reserve Bank Of New York serves continuously,
while the presidents of the other reserve Banks rotate their service of
one-year term.
4. The other presidents of federal reserve banks may attend the FOMC meeting
but they aren’t vote on the monetary policy issues (non voting members)

5. William C. Dudley
New York, Vice Chairman.
Stanley Fischer
Board of Governors.
Lael Brainard
Board of Governors.
Daniel K. Tarullo
Board of Governors.
Jerome H. Powell
Board of Governors
Charles L. Evans
Chicago.
Jeffery M. Lacker
Richmond
Dennis P. Lockhart
Atlanta
John C. Williams
San Francisco.
Janet Louise Yellen
Board of Governors, Chairman.
Current Members of FOMC: (Year 2015)

6. Federal Reserve Bank Rotation on the FOMC:
Committee membership changes at the first regularly scheduled
meeting of the year.
2015 Members - New York, Chicago, Richmond, Atlanta, San
Francisco
2015 Alternate Members - St. Louis, Kansas, Cleveland, Boston,
New York
Alternate Members:
James B. Bullard, St. Louis
Esther L. George, Kansas City
Loretta J. Meser, Oston
Christine M. Cumming, First Vice President, New York

7. The FOMC Meetings:
• The FOMC must meet at least four times each year in Washington D.C..
Since 1981, eight regularly scheduled meetings have been held each year at
intervals of five to eight weeks.
• Necessary & Notable changes to the federal fund rate and discount rate were made.
• Action such as increasing liquidity of set amount of treasury, bonds, or affecting price
of the currencies both foreign and domestic by selling dollar reserve were discussed.
• The Committee votes on the policy to be carried out during the interval between
meetings, requiring members to think ahead.
• Attendance at meetings is restricted because of the confidential nature of the
information discussed and is limited to Committee members.
Modern-day meeting of the Federal Open Market Committee at
the Eccles Building, Washington, D.C.

8. Decision making process of FOMC:
On the basis of reports prepared by the Manager of the System Open Market Account on
operations in the domestic open market and in foreign currencies, the Committee considers
factors such as:
• Trends in prices and wages.
• Employment and production.
• Consumer income and spending.
• Residential and commercial construction.
• Business investment and inventories.
• Foreign exchange markets.
• Interest rates.
• Money and credit aggregates.
• Fiscal policy.
And then the Committee members and other Reserve Bank presidents turn to policy.
Typically, each participant expresses his own views on the state of the economy and prospects for
the future and on the appropriate direction for monetary policy. Then each makes a more explicit
recommendation on policy for the coming intermeeting period.

9. Consensus:
• Finally, the Committee must reach a consensus regarding the
appropriate course for policy, which is incorporated in a
directive to the Federal Reserve Bank of New York.
• The directive is cast in terms designed to provide guidance to
the Manager in the conduct of day-to-day open market
operations.
• The directive sets forth the Committee's objectives for long-run
growth of certain key monetary and credit aggregates.
It also sets forth operating guidelines for the degree of ease or
restraint to be sought in reserve conditions and expectations
with regard to short-term rates of growth in the monetary
aggregates.
• Policy is implemented with emphasis on supplying reserves in a
manner consistent with these objectives and with the nation's
broader economic objectives.

10. Current FOMC Issues:
• Economic activity is expanding at a moderate pace. Household spending and business
fixed investment have been increasing moderately, and the housing sector has improved
further; however, net exports have been soft.
• The labor market continued to improve, with solid job gains and declining unemployment.
On balance, labor market indicators show that underutilization of labor resources has
diminished since early this year.
• Inflation has continued to run below the Committee's longer-run objective, partly
reflecting declines in energy prices and in prices of non-energy import.
• The FOMC member voted to keep interest rates at near zero levels in September, kicking
the liftoff can down the road to either October, December or sometime next year, according
to the minutes from last month’s FOMC meeting.

12. ANY QUERRIES