What is the FOMC?
FOMC (Federal Open Market Committee)
Forex Trading Glossary
Quick Answer: The FOMC is the Federal Reserve committee that sets U.S. monetary policy through rate decisions, balance sheet plans, and forward guidance.
What is the FOMC?
The Federal Open Market Committee (FOMC) sets U.S. monetary policy. Eight scheduled meetings each year influence interest rates, balance sheet plans, and forward guidance—critical drivers for USD pairs.
FOMC Policy Toolkit
- Federal funds rate: Adjusting the policy rate shapes short-term borrowing costs.
- Balance sheet operations: Quantitative easing or tightening alters liquidity conditions.
- Forward guidance: Statements and press conferences steer market expectations.
Watch the Dot Plot
Quarterly projections show each member’s preferred path for rates. Large shifts can trigger major USD repricing.
Trading Around FOMC Events
- Reduce exposure or tighten stops ahead of the statement—volatility and spreads jump instantly.
- Compare the statement to prior language to gauge hawkish or dovish turns.
- Listen to the press conference; Q&A often produces the market-moving sound bites.
- Monitor Treasury yields and equity reactions for confirmation after the initial spike.
Related Terms
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