Foundations
The FOMC meeting is the scheduled gathering at which the US Federal Reserve sets interest rates. There are eight a year, roughly every six weeks, each spanning two days and ending with a decision at 2pm New York time and a press conference at 2:30. For markets it is the closest thing to an appointment with fate: the day the world’s most important price, the cost of dollars, gets set.
The choreography
Day one is discussion; day two is the vote. At 2pm sharp the committee releases a statement, a few hundred words whose every edit against the previous version is scrutinised. Four times a year it also publishes the Summary of Economic Projections, including the famous dot plot of members’ rate forecasts. At 2:30 the Chair takes questions for about an hour. Markets routinely move MORE during the press conference than on the statement, because unscripted answers reveal more than negotiated text.
How to read a decision
The rate move itself is usually the least informative part, because markets have priced it long before (a genuine rate surprise is rare and seismic). The information is in the signals about what comes next: changes to the statement’s wording, the dots, the vote count (dissents matter), and the Chair’s tone. Commentary reduces all this to two words: hawkish (leaning towards tighter policy, higher rates) and dovish (leaning towards easier policy). A “hawkish hold” keeps rates unchanged but signals rises ahead; markets can sell off on it as if a rise had happened.
Between meetings
Three weeks after each meeting, the minutes are released: a detailed account of the debate that can move markets again if it reveals the committee was closer to acting than the statement suggested. Between meetings, individual members give speeches that markets parse for shifts. The rhythm of Fed communication, decision, press conference, minutes, speeches, is the metronome of modern markets.