Open market operations are the most important instrument of monetary policy. Open Market Committee ( FOMC ) deals with the purchase and sale of federal debt and US Treasury securities.
Treasury Securities are used to fund federal spending and are issued in negotiable and non-negotiable forms. Handled papers include:
- treasury bills (treasury bills) with maturity 13, 26, 52 weeks and denomination from 10 thousand. Dollars;
- treasury bonds (treasury bonds) denomination over 1 thousand. Dollars, which can be both medium-term, as well as long-term.
Scheduled meetings FOMC held eight times a year, at them the members of the Committee discuss the current economic situation, possible options for its development, direction of monetary policy. At least twice a year, the Committee also votes on the areas of a long-term strategy in relation to the most important indicators of the money supply and public debt..
At each meeting of the Committee, a vote is taken on the size of the interest rate. According to the results of voting, one of the following decisions can be made: raise the rate of basis points, leave unchanged, lower rate. The largest increase from 1990 year was 15 november 1994 of the year: the rate has been increased by 75 basis points, greatest decline – 50 basis points.
1 basis point = 1/100 percentage point.
The minutes of the meetings are published three weeks after the meeting. (“minutes FOMC”), which provide a brief description of the current economic situation, possible options for its development, interest rate decision and baseline forecast. Annual meeting transcripts published with a five-year delay.
Members of the Open Market Committee (FOMC)
The Committee includes seven members of the Board of Governors and the presidents of five reserve banks, one of whom is the President of the Federal Reserve Bank of New York. The presidents of other banks serve on the Committee alternately for one year, appointed at the first meeting of the year. Non-voting presidents attend meetings, participate in discussions of economics and politics.
- Banks, whose presidents will have the right to vote at Committee meetings, are selected in the following groups:
- Boston, Philadelphia, richmond;
- Cleveland, Chicago;
- Atlanta, Saint Louis, Dallas;
- Minneapolis, Kansas, San Francisco - Traditionally elected as Chairman of the Board of Governors, and vice-chairman – President of the New York Federal Reserve.
