What does the FOMC mean?

The FOMC meets eight times a year to assess the state of the economy and determine whether changes in the federal funds rate are needed. This rate is critical because it directly impacts borrowing costs for consumers and businesses, and indirectly affects inflation, employment, and overall economic growth.

One of the FOMC’s main goals is to balance two key objectives: promoting maximum employment and maintaining stable prices (i.e., controlling inflation). By adjusting interest rates, the FOMC can either stimulate economic activity (by lowering rates) or slow it down (by raising rates) to prevent inflation from spiraling out of control.

The decisions made by the FOMC are closely watched by financial markets, policymakers, and economists, as they provide important signals about the direction of the U.S. economy. These meetings and their outcomes play a critical role in shaping both short-term financial market behavior and long-term economic growth, making the FOMC’s work essential to the health of the nation’s economy.