A committee set up by the Federal Reserve Bank of US to establish and monitor monetary policies.
The main policy making body in the Federal Reserve is the Federal Open Market Committee. The FOMC is comprised of seven members of the Board of Governors from the Federal Reserve System, with the Chairman counting as one of those votes, along with the president of the New York Federal Reserve Bank and four other Federal Reserve Banks regional presidents on a rotating basis.
Their mission is to keep inflation low and productivity high. The Fed has a dual mandate – price stability and maximum employment. They do this via open market operations and by using their most important monetary tool – short term interest rates.
From the Federal Reserve:
The Federal Reserve controls the three tools of monetary policy–open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations. Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.
Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services.
Here’s the 2011 Members of the FOMC:
- Members
- Ben S. Bernanke, Board of Governors, Chairman
- William C. Dudley, New York, Vice Chairman
- Elizabeth A. Duke, Board of Governors
- Charles L. Evans, Chicago
- Richard W. Fisher, Dallas
- Narayana Kocherlakota, Minneapolis
- Charles I. Plosser, Philadelphia
- Sarah Bloom Raskin, Board of Governors
- Daniel K. Tarullo, Board of Governors
- Kevin M. Warsh, Board of Governors
- Janet L. Yellen, Board of Governors
