FOMC

The Federal Open Market Committee is the body within the Federal Reserve that sets US monetary policy, mainly through the target range for the federal funds rate. It meets eight times a year on a published schedule, with a statement and a press conference after each meeting. Decisions on the balance sheet, such as asset purchases and runoff, are also made there.

On our site, FOMC events appear in the calendar with the decision, the statement and, when released, the summary of economic projections. Read changes in the statement's wording as carefully as the decision itself.

Traders care because policy expectations are priced into rates, currencies and equities well before a meeting. The surprise, meaning the gap between expectation and outcome, drives most of the move.

Worked example (illustrative numbers, not real data): futures price a 25-basis-point cut as 80 percent likely. The committee cuts by 25 basis points, which is mostly priced in, so the move is small. A hold would be a surprise and would likely push yields higher.