Federal Open Market Committee
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The Federal Open Market Committee (FOMC), a component of the Federal Reserve System, is charged under U.S. law with overseeing open market operations in the United States, and is the principal tool of US national monetary policy. (Open market operations are the buying and selling of government securities.) The Committee sets monetary policy by specifying the short-term objective for those operations, which is currently a target level for the federal funds rate (the rate that commercial banks charge on overnight loans among themselves). The FOMC also directs operations undertaken by the Federal Reserve System in foreign exchange markets, although any intervention in foreign exchange markets is coordinated with the U.S. Treasury, which has responsibility for formulating U.S. policies regarding the exchange value of the dollar.
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[edit] FOMC Membership
The Federal Open Market Committee was created by statute currently codified at , and consists of twelve voting members: the seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank presidents. The Federal Reserve Bank of New York president always sits on the Committee, and the other presidents serve one-year terms on a rotating basis. The rotating seats are filled from the following four groups of Banks, one Bank president from each group: Boston, Philadelphia, and Richmond; Cleveland and Chicago; Atlanta, St. Louis, and Dallas; and Minneapolis, Kansas City, and San Francisco.
All of the Reserve Bank presidents, even those who are not currently voting members of the FOMC, attend Committee meetings, participate in discussions, and contribute to the Committee's assessment of the economy and policy options. The Committee meets eight times a year, roughly once every six weeks.
[edit] Stance on inflation
These policy makers tend to be divided in two camps: inflation doves and hawks.
Inflation doves tend to be equally concerned with economic growth and with keeping inflation moderate. Their critics believe they are more concerned with GDP growth than containing inflation. Therefore, doves are inclined to cut interest rates and favor ending interest rate hike cycles earlier than hawks. Notable doves are Alan Blinder and Janet Yellen.
Inflation hawks tend to be more concerned with taming inflation. Their critics believe they are not as concerned with the second half of the dual Congressional mandate, which is to promote economic growth. Federal Reserve Chairs seem to prefer to be considered hawks because the bond market treats hawks with more credibility, and accords them more flexibility. Former Fed Chairman Alan Greenspan had a sterling reputation which allowed him to leave interest rates low (Dovish policy) without igniting inflationary fears. Current Fed Chairman Ben Bernanke is attempting to establish a reputation as a vigilant hawk, but such a reputation can only be earned over an extended term. Notable hawks have been Paul Volcker, and William Poole.
[edit] Current members
2007 Members of the FOMC[1]
Members
- Ben S. Bernanke, Board of Governors, Chairman
- Timothy F. Geithner, New York, Vice Chairman
- Charles L. Evans, Chicago
- Thomas M. Hoenig, Kansas City
- Donald L. Kohn, Board of Governors
- Randall S. Kroszner, Board of Governors
- Frederic S. Mishkin, Board of Governors
- William Poole, St. Louis
- Eric S. Rosengren, Boston
- Kevin M. Warsh, Board of Governors
Alternate Members
- Richard W. Fisher, Dallas
- Sandra Pianalto, Cleveland
- Charles I. Plosser, Philadelphia
- Gary H. Stern, Minneapolis
- Christine M. Cumming, First Vice President, New York
Federal Reserve Bank Rotation on the FOMC
Committee membership changes at the first regularly scheduled meeting of the year.
2008 Members New York, Cleveland, Philadelphia, Dallas, Minneapolis
2008 Alternate Members New York, Chicago, Richmond, Atlanta, San Francisco
[edit] See also
[edit] References
[edit] External links
- Federal Open Market Committee: official site
- Federal Reserve Bank of Philadelphia: A Day in the Life of the FOMC
- University of Rochester: Shadow Open Market Committee
- Federal Reserve Board: Come with Me to the FOMC
- What happens to the markets on "Fed Days" Fed Day Charts
Federal Reserve System | |
|---|---|
Structure | |
| Federal Open Market Committee · Chairman of the Federal Reserve · Federal Reserve Banks | |
| Banknotes: | Federal Reserve Note · Federal Reserve Bank Note |
| Reports: | Monetary Policy Report to the Congress · Federal Reserve Statistical Release · Beige Book |
| Federal funds: | Federal funds · Federal funds rate · Fed Funds Probability |
| History: | Federal Reserve Act · Depository Institutions Deregulation and Monetary Control Act · History of central banking in the United States · Aldrich-Vreeland Act |
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