Forex glossary
Federal Reserve (Fed)
The Federal Reserve System (Fed) is the US central bank. The FOMC determines the monetary-policy stance, including the target range for the federal funds rate. Decisions, projections and speeches are different types of information; they may affect USD, but a projection or speech is not itself a rate decision.
Illustrative example
How does it work in practice?
In a fictional scenario, the FOMC holds its target range at 4–4.25%, and a participant later discusses a possible cut. The remark expresses a view; a policy decision, rather than the comment itself, changes the target.
A case to work through
Target and observation
A fictional file shows a 4–4.25% target range and a 4.12% effective rate.
- Label the range as the policy target.
- Label 4.12% as a separate market observation.
What follows? Do not substitute one measure for the other when reporting a decision.
Example boundary: These hypothetical rates do not specify broker funding.
A useful distinction
Federal Reserve (Fed) / Dot Plot (Fed Funds Rate Projections)
The Fed is an institution; its dot plot presents participant projections.
Check your understanding
Identify a policy target and market observation.
Show the answer and explanation
No, a formal decision is needed
Document status determines what was adopted.
Reading central-bank decisions
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Related terms
Sources and documentation
- Federal Open Market Committee – Federal Reserve
Describes the FOMC's role and federal funds rate as a distinct market measure.
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