The Federal Open Market Committee (FOMC), a committee within the Federal Reserve System, is charged under the US law with overseeing the nation's open market operations (i.e., the Fed's buying and selling of United States Treasury securities). This Federal Reserve committee makes key decisions about interest rates and the growth of the US money supply. The FOMC is the principal organ of US national monetary policy. The Committee sets monetary policy by specifying the short-term objective for the Fed's open market operations, which is usually a target level for the federal funds rate.

The Federal Open Market Committee (FOMC) began publishing the minutes for its monetary policy meetings in 2005. The detailed minutes from these meetings give some of the best insight into the monetary policy decision making process and what the FED thinks about economic developments inside and outside of the US . Markets tend to focus most of their attention on the key points discussed during the meeting that suggest future interest rate changes.

Because minutes come out three weeks after the FOMC meets, markets will discount some information in the report. Market participants tend to read into the overall mood the Federal Reserve gives during the meeting. If the FOMC is cautious about the inflationary outlook for the economy (characterized as “Hawkish”), then the market has a higher likelihood of future rate increases. If the Bank is optimistic (“Dovish”) it suggests to markets that inflation is in check and that future rate increases are less likely.

FOMC minutes provide more detailed information on the range of Committee members’ views on the appropriate policy stance, on the U.S. economic outlook, and on the near-term monetary policy inclination. The statement is released at the moment of the target rate decision, whereas the minutes come out three weeks after the FOMC meets. The extent to which market participants may scrutinize the FOMC minutes to gain information beyond what is contained in the statement is a question to be answered empirically.

The high-frequency reaction of asset prices to news announcements represents a simple and precise tool for assessing how information is impounded into security prices. The magnitude of these FOMC meeting minutes’ effect is similar to the financial market effect of a macroeconomic release such as the ISM manufacturing index, but is smaller than the market effect induced by the release of the FOMC statement and nonfarm payrolls. The asset price response to the minutes, however, has declined since 2008, suggesting the greater transparency of the FOMC.