Fomc-Federal Open Market Committee

FOMC-Federal Open Market Committee usually meets eight times a year (about every six week) and makes decisions regarding the conduct of open market operations, which influence the money supply and interest rate. The committee consists of the Board of Governors, the president of the Federal Reserve Bank of New York, and the presidents of four other Federal Reserve banks. The chairman of the Board of governors presides as the chairman of the FOMC. The FOMC is the focal point for policy making in the federal reserve system because open market operations are the most important policy tool that the fed has for controlling the money supply. FOMC does not carry securities purchases or sales. FOMC issues directives to the trading desk at the fed reserve of ny, where the manager for domestic open market operations supervises a roomful of people who execute the purchases and sales of the government or agency securities. FOMC meeting takes place in the boardroom on the second floor of the main building of the board of governors in Washington, D.C.

Stanley Fischer, MIT professor, indentified two different types of independence of central bank. Instrument independence is the ability of the central bank to set monetary policy instruments and goal independence which is the ability of the central bank to set the goals of monetary policy. The Feds is remarket ably free of the political pressures that influence other government agencies. In recent years, the fed has had net earnings of around 18 billion per year. Fed is not subject to the appropriations process usually controlled by Congress.

ECB differs from the Feds in the following ways the budgets of the federal reserve banks are controlled by the board of governors, while the national central banks control their own budgets and the budgets of the ECB in Frankfurt. Therefore the ECB has less power than the board of directors. Second, the monetary operations are not centralized as they are with the Fed. Third, the

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