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FOMC Federal Reserve and Minutes: what they are?
By Gabriele Brambilla
The Federal Reserve's FOMC meetings are always highly anticipated. Let's find out what FOMC means and what the Minutes are.
FED, FOMC and FOMC Minutes
The Federal Reserve holds enormous power over all our lives. Its decisions affect companies and consumers even outside the United States, leading to various scenarios.
As investors, we are particularly sensitive to what the famous institution decides. This is because the policies adopted by the FED can considerably influence the performance of the markets, including the crypto markets.
With a view to becoming more knowledgeable and more experienced, here is an in-depth analysis focused specifically on a FED body: the FOMC. In addition to this, we will also look at the FOMC Minutes, discussing their characteristics and purpose.
We start with the basics with a paragraph that quickly summarizes what the FED is, how it is composed and what powers it has.
What is the FED
The FED is an abbreviation of Federal Reserve, the central bank of the United States of America.
In common parlance, it refers to the main office in Washington D.C., where the Board of Governors, chaired by Jerome Powell, meets.
However, the FED is part of a more complex system, called the Federal Reserve System. In addition to the board just mentioned, it includes 12 regional banks, located in different cities across the country. This allows the central bank to have a widespread presence and to effectively carry out its functions.
What are the tasks of the Federal Reserve?
The FED is the overseas counterpart of the European Central Bank and other national entities. Their tasks are therefore similar.
Without going into too much detail, the Federal Reserve is responsible for maintaining monetary and financial stability in the US. It deals with monetary policy, supervises markets and traditional banks and works to ensure that the United States has the best possible economic environment.
To carry out its tasks, the FED is organized into specific branches and committees, each of which follows a specific area of interest. Among these, the FOMC is one of the most important.
What does FOMC mean?
FOMC stands for Federal Open Market Committee. This is the committee of the FED responsible for making decisions on the country’s monetary policies.
When inflation rates are low and markets are healthy, the FOMC is not in the media spotlight.
However, when the context changes, everyone anxiously awaits the outcome of each Committee meeting. This is because the decisions made have a huge impact on markets and on the economy, not only domestically but also globally.
The Committee is best known for its decisions on interest rates; it is this body that decides their fate and direction.
The FOMC meets eight times a year, more or less every month and a half. When a meeting is due you can feel the tension, especially in periods when inflation is not under control.
Investors, operators and experts put forward their personal estimates of what the Committee will decide; if these are confirmed, or even turn out to be better, the markets respond well. On the contrary, there are usually more or less significant contractions.
The composition of the FED FOMC includes the Board of Governors, which is joined by five presidents of regional central banks, on a rotating basis.
"The Federal Open Market Committee is the FED committee responsible for making decisions on the country's monetary policies"
FOMC Minutes
The FED Minutes are also particularly important. These are the minutes of the last FOMC meeting, published about three weeks after the event.
The FED Minutes summarize what was decided at the FOMC meeting, but go into more detail. In fact, the Minutes contain the opinions of the individual members of the Committee, as well as extensive reasoning on the FED’s medium and long-term policies.
Thanks to these minutes, it is possible to obtain a more in-depth and detailed view of both the thinking of the FOMC as a whole and that of its individual members.
The FOMC Minutes should not be confused with the transcripts of the meetings, which are released about 5 years after the event. As they are transcripts, they are even more complex.
Although they are not as important as the statements made after the FOMC, the release of the Minutes is an eagerly awaited event in the economic and financial world.
Several observations show that the market behaves differently than usual, especially on two fronts: volume of trading and volatility.
Trading volumes are generally lower before the release of the Minutes; they then increase significantly, before returning to standard levels.
Volatility increases especially in the first hour after publication. However, this also depends on the content: if the picture is already quite clear, the Minutes will have less of an impact.
"The FED Minute summarizes what was established at the previous FOMC meeting, but goes into more specifics"
FOMC and Minutes: useful websites
We conclude this brief in-depth analysis with a list of some useful sites to keep up to date.
First of all, the official portal of the Federal Reserve is full of content updated in real time. In addition, you can watch live press conferences from here.
Investing.com‘s economic calendar is also well done and comprehensive. The site immediately reports the results of FOMC meetings, as well as all the major economic indicators from around the world.
TradingView is always present, a platform highly appreciated by investors all over the world. Here you can monitor charts and data related to interest rates, inflation and much more.
Finally, we mention ourselves: The Crypto Gateway is an excellent choice for staying up to date and taking advantage of reliable content.
Now that you know what FOMC Minutes are, continue to improve your knowledge. If you are a beginner in the crypto world, here is the first episode of our dedicated course.
