Fed rate decision (FOMC): how to read it and how it moves markets

What it is

The Federal Open Market Committee is the body of the Federal Reserve that decides US monetary policy, in particular the range of the policy rate. It meets about eight times a year.

Times

The statement is released at 14:00 New York time (19:00 in the UK when daylight-saving regimes coincide) and the chair's press conference follows at 14:30. Four meetings a year also include economic projections and the so-called dot plot.

What to look at

The market reacts to the surprise against expectations, not to the decision itself.

• The rate decision against expectations (largely priced in already)
• The tone of the statement: "hawkish" (inclination to raise or hold rates high) or "dovish"
• Projections on future rates and inflation
• The chair's answers at the press conference, which can reverse the initial move

How markets react

The dollar, gold, yields and US equity indices are the most sensitive. Volatility is high in the minutes of the statement and during the press conference: wide spreads, slippage and frequent reversals.

How to behave

For a beginner it's better to stay out of the market during the statement and press conference, or cut size heavily. The site's economic calendar shows the event's date and time.