About the Federal Reserve System

Source : www.federalreserve.gov

Federal Reserve System commanly called as Fed , is the central bank of United States.It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system.

Structure of Federal Reserve :

1. The Board of Governers , in Washington, D.C
2. 12 Regional Federal Reserve Banks

Major component of Fed system is Federal Open Market Committee (FOMC) ,which is made up of the members of the Board of Governors, the president of the Federal Reserve Bank of New York, and presidents of four other Federal Reserve Banks, who serve on a rotating basis .

The FOMC oversees open market operations, which is the main tool used by the Federal Reserve to inf luence overall monetary and credit conditions

Open market operations includes the purchase or sale of securities, primarily U.S. Treasury securities, in the open market to inf luence the level of balances that depository institutions hold at the Federal Reserve Banks .

The Federal Reserve Act instructs the FOMC “to promote effectively the goals of
maximum employment, stable prices, and moderate long-term interest rates.”

The Federal Open Market Committee (FOMC) holds eight regularly scheduled meetings a
year, meaning that it meets once every six weeks. Meetings have traditionally lasted one
day, normally a Tuesday.

Fed meetings so far and the outcome includes

September 18th -------------------> Rate Cut (50bp cut to 4.75%, No Bias)
October 30th/31st ----------------> Rate Cut (25bp cut to 4.50%, Neutral Bias)
December 11th --------------------> Rate Cut (25bp cut to 4.25%, No Bias)
January 22nd (inter-meeting) -----> Rate Cut (75bp cut to 3.50%,Easing Bias)
January 29th/30th ----------------> Rate Cut (50bp cut to 3.00%,Easing Bias)

The Forecast would be for coming Fed meetings [source : Gulf Finance House]

March 18th ------------------------> Rate Cut (75bp cut to 2.25%,Easing Bias)
April 29th/30th -------------------> Rate Cut (75bp cut to 1.50%, Easing Bias)
June 24th/25th -------------------> Rate Cut (50bp cut to 1.00%, Neutral Bias)
August 5th ------------------------> No Change (1.00%, Neutral Bias)

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