What is the FOMC and when will it make interest rate announcement?
- The US Federal Reserve is anticipated to cut interest rates for a third time this year, with an announcement expected at 2 p.m. ET Wednesday.
- The Federal Reserve utilizes three primary tools in making its decision: open market operations, the discount rate, and reserve requirements, with the Federal Open Market Committee (FOMC) specifically overseeing open market operations.
- These tools are employed to adjust the federal funds rate, which is the overnight interest rate for lending between depository institutions.
- Fluctuations in the federal funds rate trigger a cascade of effects on other interest rates, foreign exchange rates, and ultimately, key economic indicators like employment, output, and prices.
- The FOMC consists of twelve members, including the seven Board of Governors, the president of the Federal Reserve Bank of New York, and four rotating Reserve Bank presidents, meeting eight times annually to assess economic conditions and set monetary policy.