1. What Happens at FOMC Meetings?**
- **Frequency**: The FOMC meets **8 times a year** (approximately every 6 weeks) in Washington, D.C.
- **Participants**:
- 12 voting members: 7 Federal Reserve Board governors + 5 of the 12 regional Fed bank presidents (New York Fed president always votes; others rotate).
- Non-voting presidents attend and contribute to discussions.
- **Key Focus**:
- Assess economic conditions (e.g., inflation, employment, GDP growth).
- Set the **federal funds rate** (the interest rate banks charge each other for overnight loans).
- Decide on other tools like quantitative easing (QE) or tightening (QT).
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### **2. Major Outcomes**
- **Interest Rate Decisions**:
- The FOMC raises rates to combat inflation or lowers them to stimulate growth.
- Example: In 2022–2023, the Fed raised rates aggressively to counter post-pandemic inflation.
- **Forward Guidance**: Clues about future policy (e.g., "higher for longer" rates).
- **Economic Projections**: Released quarterly (the "Summary of Economic Projections" or SEP), including GDP, unemployment, inflation, and rate forecasts.
- **Press Conference**: The Fed Chair (currently Jerome Powell) explains decisions and answers questions after select meetings.
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### **3. Why It Matters**
- **Markets**: FOMC decisions influence stock/bond markets, currency values (e.g., the U.S. dollar), and borrowing costs.
- **Consumers**: Impacts mortgage rates, credit card APRs, savings account yields, and auto loans.
- **Global Economy**: U.S. monetary policy affects international trade and emerging markets.
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### **4. Recent Context (2023–2024)**
- **Pause on Rate Hikes**: After 11 rate increases since March 2022, the Fed paused in late 2023 but signaled caution due to sticky inflation.
- **Quantitative Tightening (QT)**: The Fed continues shrinking its balance sheet by letting bonds mature without reinvestment.
- **Key Concerns**: Balancing inflation (aiming for 2% target) vs. risks of overtightening and causing a recession.
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