Eventually, this leads to the economy slowing down. When the economy grows too quickly and inflation exceeds the target, prices go up and people spend less money. While economic growth is generally a good sign, if the rate is too fast, it can cause problems. What Does a Hawkish Stance Mean?ДЄ hawkish stance is the opposite of a dovish one, and it means that the Fed is attempting to keep the inflation rate in check, so it doesnвЂ™t skyrocket. This encourages people to spend money and business to expand because loans are cheaper. One frequently used approach is to drop interest rates.

Thus, the Fed implements various policies and strategies designed to stimulate the economy and to stop prices from dropping too low. When the Fed states their stance is dovish, this means they are attempting to protect the nation from deflation and avoid economic contraction. These can often be an important clue regarding the possible evolution of the US dollar in the near future.ДЇor example, if the FOMC states the Fed is adopting a dovish stance, you might consider shorting the USD and vice versa if they adopt a hawkish stance. You also need to monitor the FOMC by reading FOMC minutes and checking out any announcements. You might prefer to steer clear of the market until the FOMC meeting result is published, or you might prefer to take the risk of using the predicted outcome to place your trade. Thus, as a forex trader, itвЂ™s vital to take into account the outcomes of these meetings so you know what forex trading strategy to adopt.Д«eing aware of the scheduled dates for FOMC meetings and knowing whether there is a Fed meeting on the day allows you to be prepared for the inevitable volatility that will occur in the markets.В It will also allow you to make an informed decision regarding your strategy. Many traders use fundamental analysis when trading the financial markets, and economic indicators play a key role in this.В The FOMCвЂ™s decisions on interest rates have a significant effect on the US dollar. Why Are FOMC Meetings Important to Forex Traders? The Committee publishes the minutes of these regular meetings three weeks after the policy decisionвЂ™s date. The main FOMC meetings take place eight times per year, but they hold other meetings as necessary. In turn, the FOMC rate decision has a significant effect on other economic variables, including foreign exchange rates, short-term interest rates, the price of services and goods, and even employment. These allow the Fed to influence the supply of and demand for balances held at Federal Reserve Banks by depositary institutions, and thus alter the interest rate. The Federal Reserve controls three monetary policy tools: reserve requirements, the discount rate, and open market operations. Since 2009, the FOMC has also used large-scale purchases of securities to improve economic conditions and support financial recovery by lowering long-term interest rates. Generally, the FOMC enacts policy by altering short-term interest rate levels based on economic outlook changes. The FedвЂ™s purpose is to try to achieve stable prices and moderate long-term interest rates, while maximizing employment. In December 1913, the Federal Reserve System (вЂњthe FedвЂќ) was created by President Woodrow Wilson and the US Congress to act as the Central Bank of the United States.

The FOMC, or Federal Open Market Committee, is the Federal Reserve SystemвЂ™s body for monetary policymaking.

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