How do Federal Reserve "announcements" impact the markets?
Usually the type of announcements that the Federal Reserve will make that will have the biggest impact on the market, has to do with interest rates. The Fed makes announcements that control the interest rates that affect banks lending to their best clients. As a result of that, the Fed is going to raise its rate and interest rates are going to go up, and vice versa when they're lowing their rate you'd expect interest rates to go down. This has the biggest baring on the market. But the Fed does have other meetings, conversations and announcements. They are also forward-looking. They talk about their view of the economy and inflation and what the market is doing. One tries to read those signals from the Fed and make a prediction on whether the Fed is going to raise or lower interest rates at their next meeting. The prime rate is the rate that banks charge their best clients for shot term lending.