What actually happens
The committee meets on a published schedule — eight times a year — and announces a decision on the interest rate. A written statement is released at the same moment, and the chair holds a press conference shortly afterwards. Four times a year the committee also publishes its economic projections, including each member’s view of where rates should go, shown as a chart of dots.
Three separate moves, not one
The decision moves price, the statement moves it again as the wording is read, and the press conference can undo both. A dollar that rises on the decision and falls twenty minutes later has not done anything strange; three different pieces of information arrived, and the last one was a person answering questions.
The dot plot
The dots are individual members’ expectations for the interest rate in future years. They are not a promise and they change from one projection to the next, but they are the clearest picture available of how far a committee thinks it has left to go. A dot plot that moves higher can strengthen a currency even when the rate itself was left alone.
What is already in the price
The market prices the expected decision in advance, so the surprise is what moves the currency. On days when the decision is a foregone conclusion, everything is riding on the wording, and the size of the move depends on how far the language sits from what everybody assumed it would say.
Why it belongs on your calendar even if you never trade it
Positions that survive an FOMC meeting untouched are rare. Whether you trade it or not, you need to know it is coming, because a stop placed at a sensible distance on a quiet Tuesday is not a sensible distance during the press conference.
In short
| Who | The Federal Open Market Committee |
|---|---|
| How often | Eight scheduled meetings a year |
| What arrives | Decision, statement, then a press conference |
| Four times a year | Projections, including the dot plot |
| Moves price | The surprise against what was priced |
| If you do not trade it | Know it is coming, and size for it |
Common questions
What is the dot plot?
A chart of where each committee member expects rates to be in future years. It is a projection, not a commitment, and it moves markets because it is the clearest read on how much further they intend to go.
Why did the dollar reverse during the press conference?
Because the chair said something that changed the reading of the statement. The conference is a third event, and it regularly outweighs the first two.
Should I close positions before FOMC?
That is a size decision, not a rule. If your normal stop would be inside the range the meeting can produce, either reduce the size or be flat — those are the two honest options.
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