The Federal Reserve is the central bank of the United States and the anchor of our financial system and economic health. It’s governed by a federal Board of Governors in charge of the country’s money supply and how banks are funded. This board is appointed by the president and confirmed by the U.S. Senate with the dual mandate of increasing employment and stabilizing prices to maintain a target annual inflation rate of around 2%.
Within the Federal Reserve is the Federal Open Market Committee, which is made up of the Board of Governors and regional Federal Reserve bank presidents. The committee meets throughout the year to review how the economy is going, analyze risks to employment and inflation and authorize monetary policy, including how the country’s money supply is managed.
At these FOMC meetings, the committee also sets the federal funds target rate. Called the fed rate, this rate is the benchmark that influences what U.S. banks charge to borrow money and lend money to one another — and the interest rates you’re offered on deposit accounts, loans, mortgages and other financial products.
The Federal Open Market Committee meets next on Tuesday, April 30 and Wednesday, May 1, 2024.
🗓️ 2024 FOMC meeting schedule
The 2024 meeting schedule for the FOMC began on Jan. 30, with the next session scheduled for April 30 and May 1, 2024:
January 30–January 31, 2024
Federal Open Market Committee minutes released February 21, 2024
March 19–March 20, 2024
Post-meeting statement released March 20, 2024
Federal Open Market Committee minutes released April 10, 2024
April 30–May 1, 2024
June 11–June 12, 2024
July 30–July 31, 2024
September 17–September 18, 2024
November 6–November 7, 2024
December 17–December 18, 2024
The Federal Open Market Committee meets eight times a year for two days — typically Tuesdays and Wednesdays — with additional meetings added to the schedule as the economy or financial conditions require. Outcomes of these meetings, including changes to the federal funds target rate, are announced to the public at the conclusion of the FOMC meeting, with meeting minutes released about three weeks later.
What is the Federal Open Market Committee?
The FOMC is the committee within the Federal Reserve that makes decisions around monetary policy and the open market — or the buying and selling of treasury bills and securities that regulate the country’s money supply.
The Federal Open Market Committee is made up of the seven members of the Federal Reserve Board of Governors and five presidents of the 12 Federal Reserve district banks:
Federal Reserve Bank of Atlanta
Federal Reserve Bank of Boston
Federal Reserve Bank of Chicago
Federal Reserve Bank of Cleveland
Federal Reserve Bank of Dallas
Federal Reserve Bank of Kansas City
Federal Reserve Bank of Minneapolis
Federal Reserve Bank of New York
Federal Reserve Bank of Philadelphia
Federal Reserve Bank of Richmond
Federal Reserve Bank of San Francisco
Federal Reserve Bank of St. Louis
These presidents are like bank CEOs responsible for setting, supervising and maintaining the monetary policy of their appointed regions — called districts. Created by the Federal Reserve Act of 1913, districts within the Federal Reserve System work together to manage the country’s money supply and how commercial banks are funded.
Who attends the FOMC meetings?
The seven members of the Federal Reserve’s Board of Governors and all 12 regional Federal Reserve bank presidents are welcome to attend the meetings and participate in discussions, but only Federal Open Market Committee members can vote on monetary policy.
Voting FOMC members always include the president of the Federal Reserve Bank of New York and one each from the following four bank groups, based on a rotating schedule:
Boston, Philadelphia and Richmond, Va.
Cleveland and Chicago
Atlanta, St. Louis and Dallas
Minneapolis, Kansas City, Mo. and San Francisco
2024 members of the FOMC
Jerome H. Powell, Board of Governors, Chair
John C. Williams, New York, Vice Chair
Michael S. Barr, Board of Governors
Michelle W. Bowman, Board of Governors
Lisa D. Cook, Board of Governors
Philip N. Jefferson, Board of Governors
Adriana D. Kugler, Board of Governors
Christopher J. Waller, Board of Governors
Thomas I. Barkin, Richmond
Raphael W. Bostic, Atlanta
Mary C. Daly, San Francisco
Loretta J. Mester, Cleveland
What to expect at the next FOMC meeting
The CME FedWatch Tool, which measures market expectations for fed fund rate changes, indicates a 97% chance the Fed will hold the federal funds target interest rate at 5.45% to 5.50% at its next policy meeting, on April 30 and May 1. And most economic experts agree, citing March’s Consumer Price Index data released on April 10 that showed a rise in consumer prices — a widely used indicator for inflation — to 3.5% in March, up from 3.2% in February, complicating the Fed’s next move.
The Federal Reserve increased the target interest rate 11 times from March 2022 to July 2023 in an effort to combat the highest inflation in four decades coming out of the pandemic.
At the conclusion of its rate-setting policy meeting on March 20, 2024, the Fed left the fed rate unchanged, marking the fifth straight time it’s held rates steady since July 2023. In its post-meeting statement, the Federal Reserve maintained it wouldn’t cut the key interest rate until it’s confident “that inflation is moving sustainably toward 2 percent.”
Responding to inflation concerns, Federal Reserve Chair Jerome Powell on April 16 cautioned that “recent data have clearly not given us greater confidence” that inflation is under control: “If higher inflation does persist, we can maintain the current level of [interest rates] for as long as needed.”
A rate decision is expected at the conclusion of its meeting on May 1, 2024, at 2 p.m. ET.
What does the Federal Reserve do?
The Federal Reserve is the central bank of the U.S. that sets monetary policy and regulates the financial system to support a healthy economy for Americans and businesses. Created by Congress in December 1913, It has a mandate to increase employment and stabilize prices in order to keep inflation in check.
Among its main responsibilities are determining benchmark interest rates that affect the way consumers and businesses earn and borrow money, moderating the money available for banks to borrow and lend among themselves and regulating the open market that allows buyers and sellers to trade goods and services.
Its decisions influence how much money and credit is available to Americans and businesses, which affects how we buy homes and borrow money, grow our savings and retirement funds and take on new employment within a healthy job market.
How the fed rate affects your finances
The federal funds rate — or fed rate — is the benchmark rate that sets the outlook on the state of the country’s economy, and it affects the interest rates you get on deposit accounts, loans, mortgages and other financial products.
Generally, the Fed raises the federal funds rate when the economy is strong in an attempt to slow borrowing and tame inflation:
A higher fed rate means increased annual percentage yields (APYs) on deposit accounts like certificates of deposit, high-yield savings accounts and money market accounts, helping you to earn more interest on your savings.
But it also means you’ll pay higher interest to borrow money through financial products like personal loans and credit cards. Mortgage and home loan rates don’t follow the fed rate as closely, yet when the Fed increases the benchmark rate, mortgage rates also tend to rise.
The Fed decreases the federal funds rate when the economy is sluggish, making it cheaper for you to borrow money:
A lower fed rate means you’ll pay less interest on new personal loans, and monthly repayments on variable loans like adjustable rate mortgages and credit cards can become more affordable.
But it also means lower APYs on deposit accounts like certificates of deposit, high-yield savings accounts and money market accounts, decreasing the amount of interest you can earn on your savings balances.
Dig deeper: High-yield savings account vs. CD: What to know when rates are high
Frequently asked questions: the Federal Reserve, the FOMC and your money
What is the current federal funds rate?
The current federal funds target interest rate is 5.25% to 5.50%. The Federal Reserve’s Federal Open Market Committee meets eight times a year to set this benchmark, announcing any changes to the public at the conclusion of its meeting.
At its last rate-setting policy meeting, on March 20, 2024, the Fed left the fed rate unchanged, marking the fifth consecutive time it’s held rates steady since July 2023.
What is the inflation rate?
The annual inflation rate is a measurement that reflects how quickly the prices of goods and services have increased over a year, expressed as a percentage. It’s important because inflation affects many aspects of the economy, from decreasing the purchasing power of the dollars in your wallet, to increasing the interest rates you pay to borrow money, to increasing the prices you pay on food, gas, housing, electricity and other basic needs.
The Federal Reserve is focused on keeping the inflation rate to an average 2% — a rate it’s determined as ideal for keeping employment high and prices low. A 2% inflation rate means that the goods and services you paid $1 for a year ago would now cost you 2% more — or $1.02.
You can see more about how inflation works by using the U.S. Bureau of Labor Statistics CPI Inflation Calculator, which bases its calculations on the Consumer Price Index, a widely used indicator for inflation.
How long are Federal Reserve terms?
Members of the Federal Reserve Board of Governors are appointed by the U.S. president and confirmed by the Senate for terms of 14 years. The Board of Governors chair and vice chair serve shorter terms of four years.
Tradition holds that members of the Federal Reserve’s Federal Open Market Committee elect the Board of Governors chair as FOMC chair and the president of the Federal Reserve Bank of New York as FOMC vice chair.
Sources
Federal Reserve Act, Federal Reserve. Accessed April 29, 2024.
Federal Open Market Committee, Federal Reserve. Accessed April 29, 2024.
The History and Future of the Federal Reserve’s 2 Percent Target Rate of Inflation, Council on Foreign Relations. Accessed April 29, 2024.
About the writer
Kelly Suzan Waggoner is personal finance editor at AOL. Before joining AOL, Kelly was managing editor at Bankrate and editor-in-chief at Finder, where she led a team focused on helping people to make unfamiliar financial decisions around banking, lending, credit cards, investments and more. In addition to Bankrate and Finder, Kelly’s expertise has been featured in Nasdaq, Lifehacker and other publications. Today, she’s dedicated to empowering those planning for, newly entering or fully enjoying retirement to get the most out of their finances — whether that’s saving money, managing debt, maximizing rewards or growing their wealth.