The Federal Open Market Committee (FOMC) was created in 1951 by the Federal Reserve Board to guide the four main components of monetary policy-open market operations, reserve requirements, discount rates, and the money stock. By making decisions on these components, the FOMC aims to ensure that the U.S. economy remains stable and prosperous. The FOMC meets eight times a year.The Federal Open Market Committee (FOMC) determines the direction of monetary policy in the United States. The FOMC does this by directing open market operations (OMOs). Open market operations are a key component of monetary policy. An open market operation is an auction held by the Federal Reserve Bank at which US government securities are sold (or purchased) by individual banks. These securities are bought (or sold) in order to adjust the supply of reserves. The Federal Reserve banks then use the reserves to make lending decisions or to provide loans to member banks.In other words, the FOMC directs commercial banks and other financial institutions to buy and sell specific amounts of government bonds and other government securities which are referred to as "open market operations." These operations are used to influence the money supply in order to affect interest rates, the number of new loans being made, and the value of the dollar.The goal of monetary policy is to achieve maximum employment, stable prices, and moderate long-term interest rates. The FOMC meets eight times a year to discuss current economic conditions and make decisions about monetary policy.
