Inside the FOMC

So, what I have to say is what it’s about, really, how we understand what’s happening is it starts with boots on the ground. So, it’s really the voice of Main Street that is so important. It’s the behavior, what’s happening, what’s happening with supply chain?

Expect more rate cuts in 2026, says BMO

But you also see, there’s a pretty big, there’s a pretty big group there at the top of the range, which is for no rate cuts this year. So while the median hasn’t changed in that time, you see that distribution around it has. So just something the dots plot can be interesting in looking at, you know each member’s or each participant’s thinking.

“Data available prior to the shutdown, however, show that growth in economic activity may be on a somewhat firmer trajectory than expected.” The Roboforex Review Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.

• As such, he’s expecting an additional 75 basis points of rate cuts in 2026, bringing the federal funds rate south of 3% when all is said and done.
• One way is to seek out high-quality growth stocks, which tend to see outsize benefits from lower interest rates.
• It also provides cover for open discussion during the Fed’s most intense periods of policy-making.
• Still, “signings have yet to fully reach the level needed for a healthy market” as a weakening job market offsets a “record-high stock market and growing housing wealth.”
• They also discuss the size and the asset allocation of the Federal Reserve’s balance sheet, and then they also decide how they’re going to communicate that to the public.

How we make money

The FOMC holds eight regularly scheduled meetings during the year and other meetings as needed. Links to policy statements and minutes are in the calendars below. The minutes of regularly scheduled meetings are released three weeks after the date of the policy decision. Committee membership changes at the first regularly scheduled meeting of the year. The October Fed meeting wrapped up on October 29, with the central bank’s latest policy decision.

Because this session is focused on the FOMC itself, we’re not going to delve too deeply into monetary policy. But if you’d like to learn more about how that toolbox I showed on the previous slide actually works its way through the economy and does influence maximum employment and stable prices, you can learn more at federalreserveeducation.org, and we’ll drop that link in the chat. The Federal Open Market Committee is responsible for directing monetary policy through open market operations.

Reading the Fed’s portfolio decision

So when the Federal Reserve Open Market Committee makes a decision, that policy decision is then implemented down through the Federal Reserve System. Following a recent string of lower-than-expected jobs data, the central bank resumed rate cuts at its September meeting. And while the ongoing government shutdown has delayed the release of key economic data – including the September jobs report – private data releases, such as the ADP Employment Report, underscore weakness in the labor market.

Board of Governors of the Federal Reserve System

If a voting board tends to be made up of more dovish members, it might indicate a lower interest rate policy in the year ahead. If that same voting body is more primarily composed of hawks, they might be more willing to raise interest rates at a faster pace. After each Fed meeting, the FOMC issues a policy statement that explains what officials decided to do and why.

“Inventory has climbed to a five-year high, giving home buyers more options and room for price negotiation,” says Dr. Lawrence Yun, chief economist at the National Association of Realtors. Still, “signings have yet to fully reach the level needed for a healthy market” as a weakening job market offsets a “record-high stock market and growing housing wealth.” With the Fed unlikely to start cutting interest rates until September, now could be an ideal time to lock in attractive yields on CDs.

There are 12 Federal Reserve districts, each with its own Federal Reserve Bank. These regional banks operate as extensions of the central bank. The president of the Federal Reserve Bank of New York serves continuously while the presidents of the others serve one-year terms on a three-year rotating schedule (except for Cleveland and Chicago, which rotate on a two-year basis).

In recent years, FOMC meeting minutes have been made public following the meetings. When it is reported in the news that the Fed changed interest rates, it is the result of the FOMC’s regular meetings. The Federal Reserve System is designed to be independent of government, though not independent from government. Members are appointed by the president, approved by the Senate Banking Committee and then the broader Senate before coming to the Fed.

• Asked how much longer inflation will show upward pressure specifically due to the new tariffs that Washington has imposed on imported goods, Powell estimated that it could continue into 2026.
• So it’s really helpful when we talk about the amount of uncertainty in the forecast, in the economy still, this year, to get a sense of okay, well, how are policymakers viewing the risks around their individual forecasts?
• “The committee meets eight times a year, or about once every six weeks,” writes Kiplinger contributor Dan Burrows in his feature, “When Is the Next Fed Meeting?”.
• “People who have low financial confidence are likely to spend less money, make fewer large purchases, and pay down less debt than people with high confidence.”
• So I wouldn’t ever deem to speak for the presidents in terms of like how they communicate.

The Fed’s blackout period was an unofficial practice that began in the 1980s. Roland and Miskin also note that this week’s Fed meeting could have big implications for the U.S. dollar. “A dovish Fed could cause the U.S. dollar to further weaken,” they say. Manulife John Hancock Investments Co-Chief Investment Strategists Emily Roland and Matt Miskin will be watching the 2-year Treasury yield and the U.S. dollar this Fed week. Reports from over the weekend suggest the two countries have hashed out a framework for a trade deal ahead of this Thursday’s meeting between U.S.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller. Voting against this action were Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting, and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting. The Federal Open Market Committee is the division of the Federal Reserve that sets monetary policy by managing open market operations. By doing this, the Fed influences the fed funds rate, which impacts other interest rates. The FOMC does this to either contract or expand the economy, depending on current market conditions.

“We’ve long been on the dovish end of consensus for the Bank of Canada in 2025,” says Robert Kavcic, senior economist at BMO Capital Markets. And with a soft economy and job market, “another rate cut at this meeting would be consistent with that view. It’s also a safe bet that Fed Chair Powell will be wearing a purple tie during Wednesday’s press conference. “The bond market is currently pricing in 2 more cuts in 2025 and then three more in 2026,” write Roland and Miskin in emailed commentary. “To us, this seems about right. They want to keep cutting to get closer to neutral, but want to save some cutting dry powder in case they need it.” And the central bank still has plenty of room to ease, if needed, the pair adds. Porter adds that he expects the Bank of Canada to cut its key interest rate at its meeting this week (October 29) due to these deteriorating trade conditions.