Understanding the FOMC Statement and Press Conference

Understanding the key economic news events that can influence market volatility and price direction is essential when learning how to navigate the financial markets. One of the most influential events is the release of the FOMC Statement, followed by the FOMC Press Conference.  

The next FOMC Statement and Press Conference are scheduled for 7 May, 2025. In this trading news for beginners article, we will cover what these events are, why they matter, and how to approach them with a disciplined mindset. 

This material is for informational purposes only and not financial advice. Consult a financial advisor before making investment decisions. 

What is the FOMC? 

The Federal Open Market Committee (FOMC) is a branch of the U.S. Federal Reserve which is responsible for setting monetary policy in the United States. The FOMC meets on a regular basis, typically eight times a year, to assess economic conditions and decide on key policies, particularly around interest rates and other monetary-based tools at their disposal, to manage price stability and maximum employment. 

At the conclusion of each meeting, the FOMC releases a statement outlining its policy decisions, rationale and overall economic outlook. This is known as the FOMC Statement. Sometimes, the Federal Reserve Chairman also holds a press conference shortly after releasing the statement to provide further clarity and answer questions from journalists. 

What is the FOMC Statement? 

The FOMC Statement is a written summary of the committee’s view on the U.S. economy and its monetary policy decisions. The most closely watched element is whether the Federal Reserve has decided to: 

• Raise interest rates 
• Lower interest rates 
• Keep rates unchanged 

Beyond the interest rate decision, traders pay attention to the wording in the statement, as subtle changes can signal shifts in future policy intentions. Phrases about inflation, employment, economic growth, or global risks can all influence market sentiment and volatility. 

What is the FOMC Press Conference? 

Following some FOMC meetings, the Federal Reserve Chairman holds a press conference. This event allows them to expand on the committee's decision, explain the rationale behind it, and provide insights into future considerations. 

Markets often react strongly during the press conference, especially if the tone is more hawkish or dovish than expected.  

• A hawkish tone is more in favour of tightening monetary policy by potentially increasing interest rates 
• A dovish tone is more in favour of looser monetary policy by potentially cutting interest rates. 

Why Are These Events Important for Traders? 

Both the FOMC Statement and the press conference can lead to significant price movements across financial markets, including: 

• Foreign exchange: The U.S. dollar (USD) is influenced by changes to or expectations in U.S. interest rates, and other factors. Since the USD is the world’s reserve currency, its movement influences many other currency pairs. 
• Stock market indices: Indices like the S&P 500, Dow Jones Industrial Average, and Nasdaq are sensitive to monetary policy. Lower interest rates can often support stock prices, while higher rates can weigh on equities, but this depends on other global macro factors. 
• Bonds and commodities: Interest rates have a significant impact on bond yield, which are inversely correlated to bond prices. Commodities such as gold and oil are also affected by interest policy in the U.S.  

For traders, understanding that these events can trigger volatility is crucial. Prices may move rapidly in both directions as market participants digest new information. Therefore, exercising proper risk management and utilising stop-losses is key.

How Should Beginner Traders Navigate FOMC Events? 

Trading around the FOMC requires careful planning and risk management. Many beginners prefer to stay out of the market during these times due to heightened volatility. Here are a few guidelines to consider:

1. Be Aware of the Schedule 

Always know when FOMC events are happening. You can track future releases directly from the Federal Reserve's FOMC meeting minutes calendar.  

2. Understand Market Expectations 

Markets often "price in" expectations before the event. The Admiral Markets Forex Calendar can keep you apprised of all the different economic news releases and any forecasts or expectations attached to them.  

3. Avoid Over-Exposure 

Volatility can be extreme during FOMC releases. Beginner traders should be cautious with position sizes and be careful of their overall exposure. 

4. Consider Staying on the Sidelines 

Sometimes, the best trade is no trade. Many experienced traders choose to wait until after the dust settles before entering the market. For beginners, observing how markets react during an FOMC event can be a valuable learning experience. 

5. Use Stop-Loss Orders 

If you decide to trade during these events, always use stop-loss orders to manage risk. However, be aware that during high volatility, slippage can occur, meaning orders may not execute at the exact price expected. 

6. Focus on the Bigger Picture 

While short-term movements can be dramatic, remember that the FOMC’s guidance is often about medium to long-term economic trends. By avoiding knee-jerk reactions, traders can instead consider how the policy outlook fits into broader market themes. 

Upcoming FOMC Statement & Press Conference 

The next FOMC Statement and Press Conference is on 7 May 2025, up until this time, market participants will be speculating on how the Federal Reserve will respond to current economic conditions domestically and internationally. 

No trader or analyst can predict the outcome or how the market will react, but there are some key things to watch for in the Federal Reserve Chairman Jerome Powell's press conference.  

• U.S. inflation is still above the Fed's long-term target of 2%. Will they increase, cut or keep rates on hold to try and influence inflation? 
• Where do policymakers see rates moving to in the future? Will they strike a more hawkish or dovish tone? 
• Do the Fed see the recent slowdown in economic activity and consumer sentiment as temporary, and do they expect conditions to improve? 
• Will the Fed provide commentary on the impact of U.S. President Donald Trump's trade tariffs? 
• President Trump has stated he wants to fire the Fed Chair Jerome Powell, whom he appointed in his first term. Will Powell respond to this? 

There are many factors that influence the financial markets right now, and traders will be keen to know what the head of the biggest central bank in the world is thinking.

Conclusion 

The FOMC Statement and press conference are cornerstone events in the financial calendar. Learning how to navigate the uncertainty and heightened volatility is crucial. Some traders may stay on the sidelines until price action after the news gives them a clearer sense of what is happening in the market.  

Using a demo trading account can be an alternative way to practice any trading ideas. This enables you to place trades in a virtual environment to understand the risks and emotions involved when trading the market before going live. 

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