FOMC (Federal Open Market Committee)
Eight meetings per year that move every market on earth
Definition
The Federal Open Market Committee (FOMC) is the monetary policy-setting body of the U.S. Federal Reserve. The FOMC meets 8 times per year to set the federal funds rate target — the interest rate at which banks lend to each other overnight. FOMC decisions directly affect all dollar-denominated markets: higher rates strengthen the dollar, compress stock valuations, and affect options pricing through changes in the risk-free rate (Rho). FOMC statements and press conferences are among the most market-moving events globally.
Example
At the March 2022 FOMC meeting, the Fed raised rates by 0.25% — the first hike in years. Over the next 18 months, the FOMC raised rates 11 consecutive times to a peak of 5.25–5.50%. Each announcement caused immediate moves in USD pairs, Treasury yields, and the SPX. Options traders saw IV spike before each FOMC meeting and crush immediately after the decision.
Related Terms
Frequently Asked Question
What is the FOMC?
The FOMC sets U.S. interest rates 8 times per year. Their decisions move every major market — stocks, bonds, and currencies. Traders watch FOMC statements for "hawkish" or "dovish" signals about future rate direction.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.