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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Federal Reserve meeting

Discover everything you need to know about the Federal Open Market Committee (FOMC) meeting – including when it is and why it’s important to traders.

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Call 0800 195 3100 or email newaccounts.uk@ig.com to talk about opening an account.

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Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.

Visit help and support for more information.

Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.

Visit help and support for more information.

Call 0800 409 6789 or email helpdesk.uk@ig.com if you have any questions about trading or investing. We’re available from 9am to 5pm (UK time), Monday to Friday.

Contact us 0800 409 6789

Tips for trading non-farm payrolls (NFP)
Tips for trading non-farm payrolls (NFP)

Tips for trading the FOMC meeting

Tips for trading the FOMC meeting

Ensure you’re prepared as the FOMC decision affects most markets

Remember that volatility can come from the decision, but also from the press conference that follows

Prepare for potential volatility by looking at previous market movements caused by the FOMC

What is the Federal Open Market Committee meeting?

The Federal Open Market Committee (FOMC) meeting is a regular session held by the members of the Federal Open Market Committee, a branch of the Federal Reserve that decides on the monetary policy of the United States.

After deliberating on short-term monetary policy, the FOMC will decide on a target federal funds rate that they believe will achieve their aims.

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Fed meeting dates

The FOMC will typically meet eight times a year, although there is scope for additional meetings if required. While any policy changes are announced immediately, the meetings themselves are always not public, with minutes usually released three weeks after each session.

2024 FOMC dates*

Date Minutes released
30-31 January 21 February
19-20 March* 10 April
30-1 April/May 22 May
11-12 June* 3 July
30-31 July 21 August
17-18 September* 9 October
6-7 November -
17-18 December* -

* Meetings are tentative until confirmed at the preceding session.

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How does the Fed meeting affect traders?

The FOMC meeting is usually considered the most important date on any traders’ calendar, for one overriding reason: interest rates.

Using a trio of policy tools, the FOMC can raise or lower the federal funds rate in the US.

This central rate change will trickle down to other interest rates, including FX rates and bond prices, which can have a big impact on traders.

Which markets are affected by the FOMC?

When the FOMC chooses to raise or lower interest rates, the effects reverberate across global financial markets. Here are a few specific markets to watch out for:
  • Forex: Any interest change will play out on the US dollar, by far the world’s most traded currency
  • Indices: Higher rates tend to be bad for shares, while lower rates can be a boon
  • Bonds: US bonds are often where the fallout from interest changes is felt most directly
So, traders and investors around the world will attempt to predict where monetary policy is headed next in each Fed meeting, and adjust their strategies and portfolios accordingly.

Prices above are subject to our website terms and conditions. Prices are indicative only. All shares prices are delayed by at least 15 mins.

What is the federal funds rate?

The federal funds rate is the interest rate that banks charge each other for overnight loans, meaning that it effectively acts as the base interest rate for the US economy. Changes to the federal funds rate will impact short and long-term interest rates, forex rates, and eventually economic factors like unemployment or inflation. This, in turn, will play out across the global economy.

How does the FOMC affect the federal funds rate?

While it doesn’t have a direct say over the rates charged by banks to lend money to each other, the FOMC can indirectly change the fed funds rate using three policy tools that affect money supply. These are open market operations, the discount rate, and reserve requirements.

The FOMC is specifically in charge of open market operations, while the Federal Reserve Board is in charge of the discount rate and reserve requirements.

Open market operations

Open market operations are the buying and selling of government bonds on the open market.

When the FOMC wants to decrease monetary supply, it will sell bonds, taking money out of the economy and, in turn, raising interest rates. When it wants to increase money supply, it will buy bonds, injecting money into the economy and lowering rates.

The discount rate

As well as borrowing this money from each other at the federal funds rate, banks can borrow money directly from the Federal Reserve itself.

The interest rate a bank will have to pay to borrow from the Fed is called the discount rate. A lower discount rate will encourage a lower federal funds rate, and vice versa.

Reserve requirements

Reserve requirements are the percentage of a bank’s deposits from customers that it has to hold in order to cover withdrawals.

If reserve requirements are raised, then banks can loan less money and will ask for higher interest rates. If they are lowered, then the opposite happens.

Federal Reserve quantitative easing

Quantitative easing (QE) is an extra measure that the Fed can apply in times of severe financial crisis. It is usually only used once the above policy tools have been exhausted, the federal funds rate is near zero, and economic growth is still faltering.

What does the Fed do next?

In function, QE looks fairly similar to open market operations. The FOMC buys securities on the open market, injecting money directly into the system. However, there are two key differences between the two:

  • Different assets are bought. Instead of focusing on short-term bonds, the FOMC will usually buy longer term securities to reduce rates over the long term as well as the short term

  • The aim is different. While open market operations are intended to lower the federal funds rate, QE purchases aim to massively increase money supply by adding to the Fed’s reserves

After the 2008 recession, the Fed undertook a series of QE programmes, pouring trillions of dollars into the US economy. However, it’s unclear how much QE helped the US economy recover.

FOMC key people

The FOMC can include up to seven members of the Federal Reserve Board, plus five regional Federal Reserve Bank presidents.

The seven board members are all appointed by the US president, and the board chair usually serves as the chair of the FOMC. The five bank presidents consist of the president of the Federal Reserve Bank of New York – who also serves as the FOMC vice-chair – plus four others, rotated on a yearly basis.

Analysts will sometimes classify FOMC members as monetary hawks or doves with the aim of predicting the outcome of meetings.

2024 committee members

Member Title
Jerome H. Powell Chairman, Federal Reserve board of governors
John C. Williams Vice chairman, Federal Reserve board of governors (bank president, New York)
Adriana D. Kugler Federal Reserve board of governors
Michelle W. Bowman Federal Reserve board of governors
Christopher J. Waller Federal Reserve board of governors
Philip N. Jefferson, Federal Reserve board of governors
Lisa D. Cook Federal Reserve board of governors
Michael S. Barr Federal Reserve board of governors
Austan D. Goolsbee Bank president, Chicago

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