Certain information gathered by the Reserve Banks from Reserve Bank directors and other sources is also shared with the public prior to each FOMC meeting in a report commonly known as the Beige Book. In ad-dition, every two weeks, the board of each Reserve Bank recommends discount rates (interest rates to be charged for loans to depository institutions made through that Bank’s discount window); these interest rate recommendations are subject to review and determination by the Board of Governors.The Federal Open Market Committee: Selection and FunctionThe FOMC is the body of the Federal Reserve System that sets national monetary policy (figure 2.4). The FOMC makes all decisions regarding the conduct of open market operations, which affect the federal funds rate (the rate at which depository institutions lend to each other), the size and composition of the Federal Reserve’s asset holdings, and com-munications with the public about the likely future course of monetary policy. Congress enacted legislation that created the FOMC as part of the Federal Reserve System in 1933 and 1935. FOMC MembershipThe FOMC consists of 12 voting members—the 7 members of the Board of Governors; the president of the Federal Reserve Bank of New York; and 4 of the remaining 11 Reserve Bank presidents, who serve one-year terms on a rotating basis.
16 The Three Key System EntitiesAll 12 of the Reserve Bank presidents attend FOMC meetings and par-ticipate in FOMC discussions, but only the presidents who are Commit-tee members at the time may vote on policy decisions.By law, the FOMC determines its own internal organization and, by tradition, the FOMC elects the Chair of the Board of Governors as its chair and the president of the Federal Reserve Bank of New York as its vice chair. FOMC meetings are typically held eight times each year in Washington, D.C., and at other times as needed.FOMC ResponsibilitiesThe FOMC is charged with overseeing “open market operations,” the principal tool by which the Federal Reserve executes U.S. monetary policy. These operations affect the federal funds rate, which in turn in-fluence overall monetary and credit conditions, aggregate demand, and Figure 2.4. Composition of the Federal Open Market CommitteeThe Federal Open Market Committee’s (FOMC) structure promotes the consideration of broad U.S. economic perspectives and the public interest in key monetary policy decisions made by the U.S. central bank.Board of Governors(permanent FOMCparticipants)Federal Reserve Bankof New York president(permanent FOMCparticipant)Reserve Bank presidents(serve one-year termson a rotating basis)Want to learn more about the FOMC?For more information about the FOMC, visit the About the Fed section of the Board’s website, aboutthefed/structure- federal-open-market- committee.htm.
The Federal Reserve System Purposes & Functions 17the entire economy (see section 3, “Conducting Monetary Policy,” on page 20). The FOMC also directs operations undertaken by the Federal