Which committee is responsible for making monetary policy decisions in the Federal Reserve?

The Federal Open Market Committee (FOMC) is the correct choice because it is specifically tasked with determining the direction of monetary policy in the United States. The FOMC achieves this by setting the target for the federal funds rate and by overseeing open market operations, which involve the buying and selling of government securities to influence the overall money supply and interest rates.

This committee meets regularly to assess economic and financial conditions and to adjust monetary policy as necessary to promote the goals of maximum employment, stable prices, and moderate long-term interest rates. The FOMC comprises members of the Board of Governors of the Federal Reserve System and presidents of the regional Federal Reserve Banks, ensuring that a diverse range of economic insights is considered in its decision-making process.

Other committees, such as the Federal Advisory Council, serve different advisory functions and do not make actual policy decisions. The Board of Governors plays a significant role in overseeing the Federal Reserve and ensuring the implementation of monetary policy, but it is the FOMC that directly makes the decisions regarding monetary policy. The Treasury Department, while vital in fiscal policy matters, does not have a role in the formation of monetary policy.