Inside the FOMC

Because this session is focused on the FOMC itself, we’re not going to delve too deeply into monetary policy. But if you’d like to learn more about how that toolbox I showed on the previous slide actually works its way through the economy and does influence maximum employment and stable prices, you can learn more at federalreserveeducation.org, and we’ll drop that link in the chat. The Federal Open Market Committee is responsible for directing monetary policy through open market operations.

Is the FOMC the Same As the Fed?

The Fed’s blackout period was an unofficial practice that began in the 1980s. Roland and Miskin also note that this week’s Fed meeting could have big implications for the U.S. dollar. “A dovish Fed could cause the U.S. dollar to further weaken,” they say. Manulife John Hancock Investments Co-Chief Investment Strategists Emily Roland and Matt Miskin will be watching the 2-year Treasury yield and the U.S. dollar this Fed week. Reports from over the weekend suggest the two countries have hashed out a framework for a trade deal ahead of this Thursday’s meeting between U.S.

So I wouldn’t ever deem to speak for the presidents in terms of like how they communicate. But we are kind of constantly as a system in communication with each other, and constantly sharing that information, not just internally, but, as Kathleen has said, we’re trying to get that information out to the public as much as possible. A large part of Matuschka’s work is sharing this information in her local community in the Little Rock branch zone. And so the Federal Reserve banks themselves are really important hubs for information, because they are spread out geographically over the U.S. and they are an integral part of the communities. And we’re constantly researching and surveying and trying to understand. Matuschka had that really fantastic slide about just a sampling of all of the ways that they try to gather that information.

The Fed’s October decision

So, what I have to say is what it’s about, really, how we understand what’s happening is it starts with boots on the ground. So, it’s really the voice of Main Street that is so important. It’s the behavior, what’s happening, what’s happening with supply chain?

Editorial Independence

That process, formally called large-scale asset purchases but more colloquially known as quantitative easing, can influence longer-term interest rates, while also expanding or contracting the money supply. “Looking a bit further ahead into 2026, we suspect that the near-absence of serious tariff-related inflation sets the stage for additional cuts,” the economist adds. The September CPI report all but locks in quarter-percentage-point rate cuts in both October and December, says Douglas Porter, chief economist at BMO Financial Group. Russell adds that the September CPI report keeps the Fed on track to cut rates by a quarter-percentage point at next week’s meeting, and will likely have policymakers striking a more dovish stance moving forward. Asked bluntly if he is not comfortable with financial markets assuming the Fed will cut rates again at its meeting in December, Powell hedged, noting that there are “strong views” among the Fed’s Open Market Committee, and that a cut is not a foregone conclusion.

The FOMC holds eight regularly scheduled meetings during the year and other meetings as needed. Links to policy statements and minutes are in the calendars below. The minutes of regularly scheduled meetings are released three weeks after the date of the policy decision. Committee membership changes at the first regularly scheduled meeting of the year. The October Fed meeting wrapped up on October 29, with the central bank’s latest policy decision.

• “At the beginning, the only significance was that I like purple ties,” Powell replied.
• We’re going to take a little bit of time, and Kathleen’s going to walk us through some of the what happened in the FOMC statement, and then also some of the other communication tools that the FOMC uses to communicate with the public right.
• “We expect hawks to support the cut but would not be surprised if Kansas City Fed President Jeffrey Schmid or St. Louis Fed President Alberto Musalem dissented in favor of an unchanged rate,” the Barclays economists add.
• We don’t have to wait until the next meeting to know what policymakers are thinking.

So when the Federal Reserve Open Market Committee makes a decision, that policy decision is then implemented down through the Federal Reserve System. Following a recent string of lower-than-expected jobs data, the central bank resumed rate cuts at its September meeting. And while the ongoing government shutdown has delayed the release of key economic data – including the September jobs report – private data releases, such as the ADP Employment Report, underscore weakness in the labor market.

How We Make Money

In recent years, FOMC meeting minutes have been made public following the meetings. When it is reported in the news that the Fed changed interest rates, it is the result of the FOMC’s regular meetings. The Federal Reserve System is designed to be independent of government, though not independent from government. Members are appointed by the president, approved by the Senate Banking Committee and then the broader Senate before coming to the Fed.

“Inventory has climbed to a five-year high, giving home buyers more options and room for price negotiation,” says Dr. Lawrence Yun, chief economist at the National Association of Realtors. Still, “signings have yet to fully reach the level needed for a healthy market” as a weakening job market offsets a “record-high stock market and growing housing wealth.” With the Fed unlikely to start cutting interest rates until September, now could be an ideal time to lock in attractive yields on CDs.

Who appointed Jerome Powell as Fed chair?

There are 12 Federal Reserve districts, each with its own Federal Reserve Bank. These regional banks operate as extensions of the central bank. The president of the Federal Reserve Bank of New York serves continuously while the presidents of the others serve one-year terms on a three-year rotating schedule (except for Cleveland and Chicago, which rotate on a two-year basis).

• It’s a little wild to think that before 1994 there actually wasn’t an announcement right after the FOMC meeting, telling us what the FOMC decided to do.
• And we’re constantly researching and surveying and trying to understand.
• The European Central Bank (ECB) will also announce its policy decision on Thursday.
• But sticking here with the statement, there’s still a lot of content in here.
• David is the former managing editor and chief investment strategist of Utility Forecaster and the former editorial director of Investing Daily, Charles Street Research, and Weiss Ratings.
• He did say, though, that the Fed is concerned about a bifurcated economy, where lower income people are struggling while higher income people are pumping consumption.

“Data available prior to the shutdown, however, show that growth in economic activity may be on a somewhat firmer trajectory than expected.” The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.

If a voting board tends to be made up of more dovish members, it might indicate a lower interest rate policy in What Is Bitcoin the year ahead. If that same voting body is more primarily composed of hawks, they might be more willing to raise interest rates at a faster pace. After each Fed meeting, the FOMC issues a policy statement that explains what officials decided to do and why.

Board of Governors of the Federal Reserve System

And so the other component I’ll put with that is that map we talked about. So the districts there are often more than one Federal Reserve bank responsible for a state. Now on this section in the actual document, if you were to go and download it, which I highly recommend, you’d see that there are this section covers both levels of uncertainty as well as risks around the forecast.

But you also see, there’s a pretty big, there’s a pretty big group there at the top of the range, which is for no rate cuts this year. So while the median hasn’t changed in that time, you see that distribution around it has. So just something the dots plot can be interesting in looking at, you know each member’s or each participant’s thinking.

Understanding the Federal Open Market Committee (FOMC)

Generally speaking, the wealthy don’t spend additional dollars they accrue when their portfolios gain value as readily as lower-income people do when their wages go up, he said. And in general, Powell said that the Fed does not pass judgment on whether any given level of the financial markets is right or wrong. It’s important to remember that while the Fed’s decisions can influence things like savings accounts and short-term lending rates, mortgage rates tend to follow the 10-year Treasury yield more closely. The end of shrinking the Fed’s balance sheet seems like it ought to pull down mortgage rates, at least a little. As for the economic reports we have seen, Kearney-Lederman points to the private sector data from ADP, which hinted at continued slowing in payroll creation.