Form Your Own Interest Rate Views After Knowing These 10 Federal Reserve Leaders

Interest rates in Singapore have close links to what happens in the US. And right now, the Federal Open Market Committee (FOMC) are in meetings to make a decision on what to do with benchmark interest rates in the US.

The FOMC are made up of leaders within the Federal Reserve, the central banking system of the US. Members of the Federal Open Market Committee (FOMC) decide where interest rates in there will be and the members change every year, sometimes even within the year.

The FOMC’s latest meeting started last night and is scheduled to end later tonight. With the end of the meeting comes a decision by the FOMC to either cut, hold, or raise interest rates.

In an earlier article, I shared recent speeches by Fed Chair Janet Yellen and Fed Governor Lael Brainard, who laid the case for a rate hike and a hold in rates, respectively. Both Yellen and Brainard are part of the 10-member FOMC.

My colleague David Kuo had recently stated that rate hikes would be beneficial for lenders in Singapore that include DBS Group Holdings Ltd (SGX: D05) and United Overseas Bank Ltd (SGX: U11).

The Fed’s last rate hike occurred last December and all 10 voting members in the FOMC voted to raise rates by 0.25 percentage points. But, the voters have changed.

It is important to know that the FOMC is supposed to consist of 12 members – seven from the Fed’s Board of Governors, the president of the New York Fed, and four seats that rotate annually amongst the 11 presidents of the Fed’s regional branches.

The President of the United States nominates the members of the Board of Governors and the US Senate confirms them. Because of political wrangling in the US, there are only five members in the Board of Governors when there are supposed to be seven. As a result, the FOMC currently has only 10 members.

Of the 10, six are permanent voters on the FOMC and the other four are the rotating members from the Fed’s regional branches.

As the Federal Reserve’s Board of Governors, Yellen, Stanley Fischer, Daniel Tarullo, Jerome Powell, and Lael Brainard can serve their full term of 14 years and will always be a voting member of the FOMC so long as they remain in office.

The New York Fed President, William Dudley, is also special because the New York Fed is the regional Fed body that deals with the foreign exchange operations of the US. Dudley also has a permanent vote on the FOMC, so long as he stays in office. He serves as vice chair of the FOMC while Yellen is the chair.

Right now, the other four voters in the FOMC from the Fed’s regional branches are the presidents of the St. Louis Fed, Kansas City Fed, Cleveland Fed, and Boston Fed. They are, respectively, James Bullard, Esther L. George, Loretta J Mester, and Eric Rosengren. They have all expressed their views on interest rates in one way or another in public speeches for the market to understand their inclinations.

So, now you know who the 10 voting members of the FOMC are and you can explore their recent speeches in detail to form your own view of what’s going to happen to interest rates in the US in the ongoing FOMC meeting and beyond.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat owns shares in DBS Group Holdings.