Definition
Federal Open Market Committee (FOMC)
The FOMC is the Federal Reserve's policy-setting committee that meets eight times a year to decide US interest rates and the path of monetary policy.
The FOMC sets the federal funds rate target and guides markets through statements, the dot plot and the chair's press conference. Its decisions are among the most market-moving events globally.
Indian equity and currency markets often gap on FOMC outcomes: a hawkish surprise can spark FII outflows and rupee weakness, while a dovish tilt can fuel risk-on rallies in the Sensex and Nifty. Traders worldwide parse every word of the FOMC statement for the future rate path.
Related terms
- Federal Reserve (US Fed)The Federal Reserve is the central bank of the United States, setting US interest rates and money supply, with policy decisions that ripple across global markets including India.
- Dot PlotThe dot plot is a chart in which each FOMC member anonymously marks their forecast for future US interest rates, signalling the committee's expected policy path.
- Federal Funds RateThe federal funds rate is the US Federal Reserve's key policy interest rate, an overnight target range set by the FOMC at which banks lend reserves to one another.
- Forward GuidanceForward guidance is a central bank's communication about the likely future path of policy, used to shape market expectations and influence current financial conditions.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.