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On September 16 and 17, the Federal Reserve Open Market Committee (FOMC) is scheduled to have their next meeting. This twelve-person committee of the Federal Reserve uses its meetings, which typically occur eight times per year, to help set the tone for and make important decisions about the U.S. economy. In fact, it is the primary driver of monetary policy here at home. Today, I thought I’d share a little bit of background about the committee with you as we prepare for what will come out of this next meeting.

The FOMC was established as a part of the Glass-Steagall Act, or Banking Act of 1933, which served as a sort of emergency response to the Great Depression when nearly 5,000 banks failed. Membership consists of the seven members of the Board of Governors of the Federal Reserve and the president of the Federal Reserve Bank of New York. The remaining four spots on the committee belong to other Reserve Bank presidents, who alternate one-year terms. Interesting fact: Although members have the right to elect a Chair and Vice Chair, the Committee is typically led by the Chair of the Board of Governors with the president of the Federal Reserve Bank of New York serving as Vice Chair.

In preparation for each meeting, Federal Reserve staff produces a series of reports on economic and financial conditions to help frame out the landscape for Committee members and non-member Reserve Bank Presidents. Additionally, the Manager of the System Open Market will provide background about what’s happening in operations among domestic and foreign currency markets.

During the meeting, selected staff officers will start off the conversation by delivering oral reports on some of the research that was pulled together. The committee members will then deliberate on a variety of economic indicators, such as the unemployment rate, interest rates, consumer spending and trends in prices and wages. At the end of the discussion, a vote on policy will be held, and a consensus on policy must be reached before the meeting concludes. When that consensus happens, it is issued as a directive to the Federal Reserve Bank of New York on the day-to-day conduct of market operations.

To learn more about the outcomes of the next FOMC meeting, make sure to keep an eye out for our round-up blog post, where we will touch on the decisions that are made this month.