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The Federal Open Market Committee (FOMC) is charged under U.S. law with overseeing open market operations in the United States, and is the principal tool of US national monetary policy. (Open market operations are the buying and selling of government securities.) The Committee sets monetary policy by specifying the short-term objective for those operations, which is currently a target level for the federal funds rate (the rate that commercial banks charge on overnight loans among themselves). The FOMC also directs operations undertaken by the Federal Reserve in foreign exchange markets, although any intervention in foreign exchange markets is coordinated with the U.S. Treasury, which has responsibility for formulating U.S. policies regarding the exchange value of the dollar.
FOMC Membership The Federal Open Market Committee was created by statute currently codified at , and consists of twelve voting members: the seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank presidents. The New York Reserve Bank president always sits on the Committee, and the other presidents serve one-year terms on a rotating basis. The rotating seats are filled from the following four groups of Banks, one Bank president from each group: Boston, Philadelphia, and Richmond; Cleveland and Chicago; Atlanta, St. Louis, and Dallas; and Minneapolis, Kansas City, and San Francisco. All of the Reserve Bank presidents, even those who are not currently voting members of the FOMC, attend the meetings of the Committee, participate in the discussions, and contribute to the Committee's assessment of the economy and policy options. The Committee meets eight times a year, roughly once in six weeks. Stance on inflation These policy makers tend to fall into 2 camps: inflation doves and hawks. Inflation doves tend to be equally concerned with economic growth and with retaining the reins on inflation. Their critics would say they are more concerned with GDP growth than containing inflation. Therefore, Doves are more ready to cut interest rates and favor ending interest rate hiking cycles earlier than hawks. Notable doves are Alan Blinder and Janet Yellen. Inflation hawks tend to be more concerned with taming inflation. Their critics would say they are not as concerned with the second half of the dual Congressional mandate, which is to promote economic growth. Federal Reserve Chairs seem to prefer to be considered hawks as the bond market treats Hawks with more credibility, and gives them more flexibility. Alan Greenspan had a sterling reputation which allowed him to leave interest rates low (very Dovish actions) without igniting inflationary fears. So labeling Greenspan is problematic. Ben Bernanke is attempting to establish a reputation as a vigilant hawk, but such a reputation takes time and results to solidify. Notable hawks are Paul Volker, Alan Greenspan, and William Poole. Current Members Members There are currently two openings on the Board of Governors leaving two open seats on FOMC. Source | ||||||||
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