About every two years a governor’s term expires, and a new governor is appointed. So, you have a lot of consistency over time, so that they can maintain their focus on those monetary policy long term goals. Today’s mostly benign inflation report for September should make the Federal Reserve more comfortable with cutting short-term interest rates by another quarter-point at their policy meeting on October 29.
- Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.
- Fed meetings have become key events on Wall Street after inflation hit a pandemic-induced 40-year peak in 2022 – which forced the central bank into an aggressive rate-hiking campaign that lifted the federal funds rate to its highest level in more than two decades.
- One thing I’ll note here, too, is when we talk about those that are actually voting on policy you’ll often hear us refer to those as FOMC members, but as Amanda referenced earlier, all 19 participate in the discussion.
- Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate.
- With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com.
- In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.
And « the September CPI, the only government data to be released this month, showed inflation that remains above the Fed’s target but that is not rapidly rising, with both headline and core inflation at 3.0% year-on-year. » « It will be interesting to see whether the Fed will change language around the health of the U.S. economy, » Helfstein adds. « Fed Chair Powell has been emphasizing the mounting risk to the labor market, but the real-time GDPNow numbers suggest growth is better than expected. » The European Central Bank (ECB) will also announce its policy decision on Thursday. « The October ECB meeting should be a placeholder, with no rate change and only fine-tuning of communication, » says the BofA Securities Global Rates & Currencies Research team. « We still expect a cut in December and March, but conviction on December is getting smaller. »
How well do you know the Fed?
But I just wanted to give a little history on really the recent last few years, and that increase in transparency that we have really giving us a sense of what are policymakers thinking around the decision. And we get a lot of that from the summary of economic projections. So, when we think about, you know, we kind of sometimes take these FOMC Cryptocurrency trading for beginners statements for granted. But really that’s only been the practice officially for about 25 years to get them every meeting, even when there’s not a policy change further in this kind of enhancement with transparency, we now have the summary of economic projections.
Consistent with that modest downward revision to growth is an increase in the projections for the unemployment rate. So, we see that for the median projection, by the end of this year, the unemployment rate is expected to be 4.5% where it remains in 2026, and then ticks down to 4.4% in 2027. But when we’re out there doing that, it’s definitely an economic exchange. So, we’re trying to also get information and share information.
At last check, Dow Jones Industrial Average futures were up 0.1% on strength in Nvidia (NVDA). Shares in the AI chip giant have gained more than 3% in premarket trading, putting the company on track to surpass a $5 trillion market capitalization, after President Trump said he will discuss Blackwell chips with Chinese President Xi Jinping at tomorrow’s meeting. Jerome Powell stepped into his role as Fed chair on February 5, 2018, after being nominated by then-President Donald Trump, who was serving his first term in the White House. Fed-watchers see the policy as a measure against corruption and the potential for information leaks to distort markets. It also provides cover for open discussion during the Fed’s most intense periods of policy-making. These two-week « blackout periods » begin the second Saturday that falls 10 days before the next FOMC meeting and end the Thursday that follows the meeting.
When is Trump meeting with Xi?
So, lots of expertise and resources around the table with me today, as we talk through how decisions are made, what they mean for the economy, and really why it should matter to you. She creates educational content about economics, the Federal reserve and personal finance. She also shares that content with K through 12 students, college students and their educators. Tools and resources to find and use economic data worldwide. The FOMC is a branch of the Federal Reserve System that governs the country’s monetary policy.
Is the FOMC the Same As the Fed?
The three main stock market indexes are all pointed higher ahead of Monday’s opening bell as upbeat U.S.-China trade headlines boost sentiment. With the next Fed meeting on deck, we decided to test your basic knowledge of the Federal Reserve and how its actions impact you and your money. This time around, Deutsche Bank economists anticipate several changes based on what Fed Chair Powell had to say during his October 14 speech at the National Association for Business Economics Annual Meeting. « Just to recap, » says Douglas Porter, chief economist at BMO Financial Group, « the U.S. has imposed a 50% tariff on steel and aluminum, up to 25% tariff on vehicles, a 45% tariff on lumber. » Additionally, lower interest rates boost the current value of future profits, which increases valuations for firms with long-term earnings potential. One way is to seek out high-quality growth stocks, which tend to see outsize benefits from lower interest rates.
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- The Fed’s blackout period was an unofficial practice that began in the 1980s.
- The October Fed meeting is a key economic event, with Wall Street turned into what Fed Chair Powell & Co. did about interest rates.
- And again, I also love to share, if you have the opportunity to sit at a roundtable, those of you listening, if you have an opportunity to share your voice, it’s so important to us.
- Now, I’ve spent a lot of time talking about the statement as well as the summary of economic projections table as well as the dots plot, and these really get a lot of the attention when the FOMC concludes their meetings eight times a year.
- The term « monetary policy » refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals.
- « We still expect a cut in December and March, but conviction on December is getting smaller. »
Under Fed Chair Jerome Powell’s tenure, the FOMC also moved toward holding a press conference after each meeting, hosted by Powell. Meanwhile, the five other slots on the FOMC come from the 12 regional Fed banks. The Federal Open Market Committee « is required to meet at least four times a year and may convene additional meetings if necessary, » Burrows adds, noting that « the convention of meeting eight times per year dates back to the market stresses of 1981. » The Fed also decided it will no longer reduce its portfolio of securities as of December 1. The December 1 end concludes, for now, a more than three-year process of shrinking the Fed’s balance sheet that began in June 2022. The Fed will still have about $6.5 trillion in its portfolio, substantially above the $4.5 trillion 10 years ago, before the pandemic.
So just kind of keep that in mind, and that’s all in the tables when you download them you’ll see all those notes. What’s also very helpful about this table is the comparison to the previous projections as I mentioned. So we see the downward revision to GDP growth in 2025, as well as a slight downward revision in 2026.
This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. David is the former managing editor and chief investment strategist of Utility Forecaster and the former editorial director of Investing Daily, Charles Street Research, and Weiss Ratings. A former stockbroker, David has been working in financial media for more than 20 years.
Stock futures point higher as Fed meeting kicks off
So we’re going to need to continue waiting to see the incoming data, the evolving outlook and the balance of risks to the forecast. But sticking here with the statement, there’s still a lot of content in here. It notes that the committee will continue reducing its holdings of Treasury securities and agency debt as well as agency mortgage-backed securities, or MBS as we often abbreviate.
A FOMC statement is actually pretty easy to understand, because it has really identifiable parts. So, it starts with recent economic developments, just kind of discussing what’s happened in the economy since the last meeting. So, we’ll go out and look at surveys and see what people have we’ll do quarterly surveys, sometimes the Board of Governors will have surveys for us that they want us to share.