The Federal Open Market Committee, popularly known as FOMC, is the branch of the United States Federal Reserve that determines the course of monetary policy. FOMC announcements inform everyone about the US Federal Reserve's decision on interest rates and are one of the most anticipated events on the economic calendar.
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The Federal Open Market Committee is the monetary policy arm of the Federal Reserve System, the central bank of the United States. It works with the Federal Reserve Board of Governors to control the three tools of monetary policy. The FOMC controls open market operations. The Board sets the discount rate and reserve requirement.

The FOMC uses its tools to attain the ideal economic growth rate of between 2 and 3 To achieve that, it must fight unemployment and inflation. The natural rate of unemployment is between 4.7 percent to 5.8 percent. Below that, companies can't find enough workers to remain productive. The target inflation rate is 2 percent. That means the FOMC wants prices to increase around 2 percent each year. This sets up expectations of inflation, and it motivates consumers to buy now rather than later. A mild inflation rate spurs demand, and that's good for economic growth.
To lower unemployment, the FOMC uses expansionary monetary policy. That boosts economic growth by increasing the money supply. It lowers rates to spur economic growth and reduce unemployment.
If the economy grows too fast, then prices rise, causing inflation. To fight inflation, it uses contractionary monetary policy. That makes money more expensive, slowing the economy down. A slower economy means that businesses can't afford to raise prices without losing customers, and may even lower prices to gain customers.
This combats inflation.
What the FOMC Does
The Committee adjust interest rates by setting a target for the fed funds rate. This is the rate that banks charge each other for overnight loans known as Fed funds. Banks use these loans to make sure they have enough to meet the Fed's reserve requirement. Banks must keep this reserve each night at their local Federal Reserve bank, or in cash in their vaults.
The Committee announces its decisions at its eight meetings per year. It explains its actions by commenting on how well the economy is performing, especially inflation and unemployment. Find out what was done at the latest FOMC meeting.
Although the FOMC sets a target for the fed funds rate, banks actually set the rate itself. The Fed pressures banks to conform to its target with its open market operations. The Fed purchases securities, usually Treasury notes, from member banks. When the Fed want the rate to fall, it buys securities from banks. In return, it adds to their reserves, giving the bank more Fed funds than it wants. Banks will lower the fed funds rate to lend out this extra reserve. Conversely, when the Fed wants rates to rise, it replaces the bank's reserves with securities. This reduces the amount available to lend, forcing the banks to increase rates.
To fight 2008 financial crisis, the FOMC greatly expanded its use of open market operations. That's called quantitative easing. The Fed purchased massive amounts of Treasury notes and mortgage-backed securities to achieve its goals.
Members
The FOMC has twelve voting members. Its Chairman is the Chair of the Federal Reserve Board.
Until February 3 2018, the Chair is Janet Yellen. Analysts say she is "dovish." That means she is more concerned about unemployment than inflation. She tends to favor a lower fed funds rate and other expansionary monetary strategies.
The Vice-Chairmanship always goes to the president of the Federal Reserve Bank of New York. In 2017, that was William Dudley, a Yellen ally. He will leave the position in 2018, six months early. The First Vice President, Michael Strine, is his alternate.
Seven of the twelve positions are filled by the Federal Reserve's Board of Governors. Since the recession, Congress has only filled five of the Board's seven positions. The Senate Banking Committee didn't want to approve President Obama's nominations until after the 2016 Presidential election.