#FOMCMeeting About the FOMC

The term "monetary policy" refers to the measures taken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit in order to promote national economic goals. The Federal Reserve Act of 1913 granted the Federal Reserve the responsibility of setting monetary policy.

The Federal Reserve controls the three instruments of monetary policy: open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, while the Federal Open Market Committee is responsible for open market operations. Through these three instruments, the Federal Reserve influences the demand and supply of balances that depository institutions hold at Federal Reserve banks and, in this way, alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances held at the Federal Reserve to other depository institutions overnight.