What is the primary responsibility of the Federal Open Market Committee (FOMC)?

The Federal Open Market Committee (FOMC) is primarily responsible for making key decisions about interest rates, which is central to the implementation of U.S. monetary policy. By adjusting interest rates, the FOMC influences the cost of borrowing and the level of spending in the economy. When the FOMC raises or lowers the federal funds rate, it affects not only interest rates for loans and mortgages but also broader economic conditions, including inflation and employment levels.

This function is crucial in regulating the money supply and facilitating stable economic growth. The effective management of interest rates helps in controlling inflation and fostering an environment conducive to maximum employment, aligning with the dual mandate of the Federal Reserve.

In contrast, setting fiscal policy is the responsibility of Congress and the Executive Branch, involving decisions on taxation and government spending. The regulation of the stock market falls under the jurisdiction of the Securities and Exchange Commission (SEC), while controlling government spending levels is also a function of fiscal policy and not directly within the FOMC’s mandate.