How does FED take decisions?
In the USA, which has the largest economy in the world, the country's central bank (FED) is highly influential in the global financial markets and directs asset prices through its decisions and instruments. FED's monetary policy and decisions are closely monitored by the investors. The structure of the US central bank, operating with a system called the Federal Reserve System (FRS), is a different organization than the one in effect in most countries around the world.
The FRS consists of the central banks of 12 regions in the country and a board of directors. Each central bank has its own board and chairman. At the meeting of the Federal Open Market Committee (FOMC) held 8 times a year under normal economic conditions, the members of the board of directors and the heads of 12 banks are present. The number of meetings in question increases when necessary.
In FOMC meetings, the members involved in the decision-making mechanism are of great importance. The Board of Directors consists of 7 members and the head of five central banks. The heads of the seven remaining central banks can express their opinions and do not have the right to vote on the decisions to be taken.
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Within the structure of the FED, where investors follow their statements and decisions very closely, the presidents with 7 voting board members can be listed as follows;
Boston FED President EricRosangren
New York FED President William C. Dudley
Chicago FED President Charles L. Evans
St. James Bullard, President of Louis FED
Esther George, President of Kansas City FED
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The Board of Directors and FRS Chairman Ben Bernanke are responsible for leading the FOMC meetings during the term of office and for making explanations at the official press conferences of the Bank. At the same time, the President informs US senators about the monetary policies implemented and answers the questions of the authorities in the FED's presentations in the Senate. President Bernanke's views on the economy and his speeches in parallel are examined in detail by the financial markets.
The US dollar is seen as a very important and reliable currency used by many countries in the world trade. Therefore, the FED, which takes decisions on the money in question, is a central bank that the world follows very closely. Decisions that affect the value of the dollar can affect not only speculators but also any economic unit in terms of income or expenses.
In this framework, it is an important advantage to know how the FED has taken its decisions, how the voting system is and which members are involved in the decision-making mechanism.
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