FOMC

DEFINITION

The Federal Open Market Committee — the twelve-member body inside the Federal Reserve that sets the target range for the federal funds rate. It meets eight times a year, and every meeting ends in a vote: cut, hold, or hike.

The FOMC is made up of the Fed's seven Board of Governors members plus five of the twelve regional Reserve Bank presidents on a rotating basis. Its decisions move faster and further through markets than almost anything else in macro, because the target rate sets the price of money itself — what it costs to borrow, and what cash pays for doing nothing.

Four times a year the meeting includes the Summary of Economic Projections, better known as the dot plot: each member's anonymous forecast for where rates are headed over the next few years, plotted as a scatter. Traders read the dots as a signal of the Committee's own intentions, even though the Fed insists they are not a promise.

For bitcoin, the FOMC is arguably the single largest external force on price. Bitcoin trades as a long-duration risk asset: when rates are held high or raised, cash competes harder for capital and the opportunity cost of holding a non-yielding asset rises. When rates fall, the opposite happens. Vote splits matter too — a divided Committee raises uncertainty about the next decision, which raises the value of every data point released in between.

IN A SENTENCE

"The FOMC held at 3.5%–3.75% on a 9–3 vote — the split is the more interesting number."

IN THE NEWS