Which group votes on open-market operations to control the U.S. money supply and interest rates?
Social Studies · High School · Mon Jan 18 2021
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- The group that votes on open-market operations to control the U.S. money supply and interest rates is the Federal Open Market Committee (FOMC). The FOMC is a component of the Federal Reserve System, which is the central bank of the United States.
- The committee consists of twelve members: the seven members of the Federal Reserve's Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis.
- The FOMC meets several times a year to discuss monetary policy. During these meetings, they decide whether to buy or sell U.S. Treasury securities in the open market. Buying securities tends to increase the money supply and lower interest rates, while selling securities has the opposite effect, decreasing the money supply and raising interest rates. These decisions influence the level of economic activity and inflation, thereby impacting the overall economy.