The Federal Open Market Committee — FOMC — is the body within the Federal Reserve that sets US monetary policy. It meets eight times a year, and each meeting has the potential to move every major market: forex, equities, bonds, gold, and crypto. For traders, FOMC days are among the most important on the calendar.
What FOMC meetings produce
Each FOMC meeting concludes with three distinct events, released in sequence:
- The rate decision — published at 2:00 PM ET. The federal funds rate target is either raised, held, or cut.
- The statement — released alongside the decision. A few paragraphs describing the committee's view of the economy and the rationale for the decision.
- The press conference — begins at 2:30 PM ET, hosted by the Fed Chair. Lasts about an hour. This is often where the biggest market moves happen.
Four times a year, the meetings also include a Summary of Economic Projections, which contains the famous dot plot — each committee member's anonymous projection for where rates will be at the end of the next few years. The dot plot can shift market expectations dramatically.
Why the market cares
Interest rates are the price of money. When the Fed raises rates, every dollar-denominated asset is repriced. Higher rates make holding cash more attractive, which strengthens the dollar against other currencies. They also raise borrowing costs for businesses and consumers, which weighs on stocks and supports the dollar further.
But the rate decision itself is rarely a surprise. By the time the FOMC meets, the market has usually priced in the likely move based on weeks of Fed communications. What moves the market is the guidance — language about future moves, the Chair's tone, and any shift in the dot plot.
A 0.25 percent rate hike that was fully expected can still cause a violent move if the statement signals more hikes coming. Conversely, a hike that comes with dovish language — hinting at a pause — can weaken the dollar even on a hawkish action.
Bullish USD · Bearish gold · Bearish bonds · Bearish equities (especially growth)
Bearish USD · Bullish gold · Bullish bonds · Bullish equities (especially growth)
How traders use FOMC
The most important thing to understand about FOMC is that there are two distinct windows of market reaction. The 2:00 PM rate decision and statement produce one move. Then, thirty minutes later, the press conference often produces a second, sometimes larger, move in the opposite direction.
Experienced traders frequently avoid taking positions before 2:00 PM and instead wait for the press conference to conclude — usually around 3:30 PM ET — before committing capital. The first hour after the press conference often establishes the direction for the rest of the week.
Watch for changes in specific phrases in the statement. Words like "patient," "data-dependent," "appropriate," and "transitory" carry weight. When the Fed changes or removes a key phrase, that signals a shift in stance. Algorithms parse the statement in milliseconds and trade accordingly.
Common mistakes
The biggest mistake is trading the rate decision and ignoring the press conference. Many of the largest FOMC moves happen during Powell's Q&A, not at 2:00 PM. Traders who close positions at 2:15 PM thinking the event is over routinely miss the real move.
Another mistake is anchoring on the rate decision itself. As covered above, the market trades guidance, not the action. A no-change decision with hawkish language can move the dollar more than an actual hike with dovish language.
Finally, do not trade FOMC with full position size. Spreads widen significantly during the announcement and the press conference. Slippage on stops can be substantial. Many traders cut their normal position size in half or more for FOMC days.
Related tools and resources
The economic calendar lists all FOMC meeting dates for the year. Use the position size calculator to scale down for FOMC volatility, and the risk/reward calculator to evaluate setups around the meeting. Pair FOMC analysis with CPI and NFP data for a complete macro picture.