The Federal Open Market Committee (FOMC) is the team behind the US Federal Reserve that controls the nation’s cash supply through open market operations.
The FOMC was formed in 1913 when the Federal Reserve Act of 1913 gave the Fed duty over the US’s monetary policies in response to the massive financial panic and bank runs especially during 1907.
The committee evaluates the nation’s economic and financial conditions and determines the fitting monetary policy, as mentioned, through open market operations. One of the Fed’s main goals is to control the country’s inflation by setting inflation targets.
The committee aims to meet this target by establishing a target for the Federal funds rate (the cost that banks charge each other on overnight borrowings) as well. The selling of government securities to banks lessens the amount of funds that they would be able to lend, effectively increasing the interest rate.
On the flip side, buying government securities from the banks increases their available funds, thus, decreasing the interest rate.
The FOMC is made up of 12 members – the 7 members of the Board of Governors of the Federal Reserve System; Federal Reserve Bank of New York president; and 4 of the 11 Reserve Bank presidents, who are appointed on a one-year rotating term.
The current members are as follows:
2017 Committee Members
- Janet L. Yellen, Board of Governors, Chair
- William C. Dudley, New York, Vice Chairman
- Lael Brainard, Board of Governors
- Charles L. Evans, Chicago
- Patrick Harker, Philadelphia
- Robert S. Kaplan, Dallas
- Neel Kashkari, Minneapolis
- Jerome H. Powell, Board of Governors
- Randal K. Quarles, Board of Governors
- Raphael W. Bostic, Atlanta
- Loretta J. Mester, Cleveland
- Mark L. Mullinix, First Vice President, Richmond
- Michael Strine, First Vice President, New York
- John C. Williams, San Francisco