Noticing that every time FOMC news comes out, the stock market, gold, and bonds all start to change dramatically. But what exactly is FOMC? Why do their meetings have such a huge influence on the global financial markets?

From my research, the FOMC or Federal Open Market Committee is the monetary policy committee of the U.S. Federal Reserve. It consists of 12 senior officials responsible for making monetary policy decisions through actions in the money markets to achieve two main goals: maintaining price stability (monitoring inflation rates) and supporting employment.

What’s interesting is that the FOMC has 7 members from the Fed Board of Governors, plus the President of the New York Fed, and 4 members from other Fed districts. Current members like Jerome Powell, who serves as Chair, rotate positions annually. Analyzing the FOMC requires considering each member’s viewpoints.

The FOMC holds meetings 8 times a year, approximately every six weeks, over two days, and issues a statement on the final day, usually before midnight Thai time. The outcomes of the FOMC meetings directly impact the bond markets because this market is larger than $51 trillion.

Regarding the tools the FOMC uses to control monetary policy, there are three main methods: buying bonds to increase liquidity, selling bonds to withdraw liquidity, and adjusting the Fed Funds Rate, which is the overnight interest rate banks use to lend to each other. When this rate rises, financial institutions reduce borrowing, leading to less money circulation. Conversely, when it falls, borrowing increases.

Another thing investors should watch closely is the Dot Plot, a chart showing FOMC members’ views on what the interest rate should be at the next meeting. This graph helps us see future decision-making trends of the FOMC.

In summary, the FOMC is the heart of U.S. monetary policy. Their decisions impact global financial markets through interest rates and liquidity control. All investors, regardless of their market, need to closely follow FOMC movements because even small decisions can have significant effects on our portfolios.