As expected, the FOMC kept the fed funds target rate range at 5.25-5.50 percent after the October 31-November 1 meeting. The post-meeting statement was little changed from the one issued September 20. There were a few tweaks to the language. Now that the third quarter GDP report is in, the assessment of expansion was upgraded slightly to"strong" from"solid". Job gains are now said to"have moderated since earlier in the year" from"slowed in recent months". The assessment of inflation is unchanged as"remains elevated". Overall, this indicates that Fed policymakers do not see a lot of difference in the data between mid-September and now.

The other change in the language is the mention of conditions being tighter not just for credit but for"financial and credit". These are expected to"weigh on economic activity, hiring, and inflation" as in the prior statement.

The FOMC is maintaining its vigilance on inflation and other uncertainties to the outlook. The statement repeated,"The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments." This leaves future rate hikes on the table if the data on inflation and/or inflation expectations turn less favorable, but does not rule out that rates have topped out, although it remains probable that restrictive policy will remain in place for some time yet.

The Federal Reserve is expected to hold policy steady for a second straight meeting, waiting for the effects of prior rate hikes to further slow inflation.

The FOMC meeting announcement is a policy statement issued at the conclusion of each meeting of the Federal Open Market Committee. It offers updates on economic conditions with special focus on the health of the labor market and the latest on inflation. It also updates the status of the federal funds target which is the FOMC's official policy interest rate. This rate is expressed within a range, such as 1.75 to 2.00 percent. The center of this range is the implied target. The higher this target, the more restrictive monetary policy becomes, the lower this target, the more accommodative policy becomes. Other policy tools are also discussed in the meeting announcement including updates on direct purchases of Treasuries and mortgage-backed securities. Debate is not offered in the statement, just the consensus view is expressed, though the statement does list the total committee vote and how each member voted.

The Fed determines interest rate policy at FOMC meetings. These occur roughly every six weeks and are the single most influential event for the markets. For weeks in advance, market participants speculate about the possibility of an interest rate change at these meetings. If the outcome is different from expectations, the impact on the markets can be dramatic and far-reaching.

The interest rate set by the Fed, the federal funds rate, serves as a benchmark for all other rates. A change in the fed funds rate, the lending rate banks charge each other for the use of overnight funds, translates directly through to all other interest rates from Treasury bonds to mortgage loans. It also changes the dynamics of competition for investor dollars. When bonds yield 5 percent, they will attract more money away from stocks than when they only yield 3 percent.

The level of interest rates affects the economy. Higher interest rates tend to slow economic activity; lower interest rates stimulate economic activity. Either way, interest rates influence the sales environment. In the consumer sector, fewer homes or cars will be purchased when interest rates rise. Furthermore, interest rate costs are a significant factor for many businesses, particularly for companies with high debt loads or who have to finance high inventory levels. This interest cost has a direct impact on corporate profits. The bottom line is that higher interest rates are bearish for the stock market, while lower interest rates are bullish.

The Fed also began quantitative easing during the past recession and, through direct purchases in the market, steadily increased its holdings of Treasuries and mortgage-back securities before pulling back from the program beginning in late 2017. Along with lowering its bond holdings, the Fed began to gradually raise its federal funds target until mid-2019 when, facing slowing global growth, it began to lower its target.

Frequency
Eight times a year.