The Federal Reserve's Federal Open Market Committee, which begins a regular two-day meeting today to decide what course the central bank's monetary policy should take, is a powerful body.

The 19-member FOMC is expected to agree to tighten credit conditions to slow rapid growth of the money supply as part of an effort to avoid an overly rapid recovery and a resurgence of inflation.

The meeting will continue into Wednesday because the committee will review its targets for money growth for the remainder of this year and set tentative targets for 1984. As required by law, Federal Reserve Chairman Paul A. Volcker will report those decisions to the House Banking, Finance and Urban Affairs Committee on July 20.

This time, the markets may get some information sooner, because Volcker will appear Thursday before the Senate Banking, Housing and Urban Affairs Committee for a confirmation hearing on his reappointment as chairman.

But Volcker will not have any prepared testimony, and it may be that the markets will have to watch the interest rate on federal funds--money lent by one bank to another to meet reserve requirements on various types of deposits--for clues to what the FOMC is doing.

The committee only discloses the full minutes of its meetings following the subsequent session. The FOMC and the Fed employes who implement its policy decisions go to considerable lengths to avoid misleading financial market participants about what they are doing, but they remain convinced that they can achieve the desired results more efficiently if the markets remain at least somewhat uncertain about the operational details of that policy.

The committee includes the seven members of the board of governors of the Federal Reserve system, of which Volcker is chairman. The other members are the presidents of the 12 regional Federal Reserve banks.

The president of the New York Federal Reserve Bank is always a voting member of the FOMC. The other four voting positions rotate so that different regions always are represented. The Cleveland and Chicago presidents get to vote every other year because they are grouped with New York. The other groupings are Minneapolis, Kansas City and San Francisco; Atlanta, Dallas and St. Louis; and Boston, Philadelphia and Richmond.

Operationally, the FOMC influences the rate of growth of the money supply by supplying more or fewer reserves to the banking system. If the money supply is rising more rapidly than the Fed wishes, which is true currently, the FOMC can direct the Open Market Desk at the New York Federal Reserve Bank to slow it down by being less generous in providing reserves through the purchase of government securities. Such purchases put cash--reserves--into the banking system.

For the system as a whole, the Federal Reserve is the only source of additional reserves. When deposits, and therefore the money supply, are increasing too fast, and the Fed tightens up, reserves become less available and their price--the federal funds interest rate--rises, too. That is what Fed watchers will be looking at on Thursday and Friday.

The federal funds rate generally has been above 9 percent recently while the discount rate--the interest that the Fed charges when financial institutions borrow reserves directly from it--remains at 8 1/2 percent. Thus, it is cheaper for a financial institution to borrow needed reserves from the Fed than from other banks.

Under normal conditions, the Federal Reserve moves the discount rate up and down more or less as the federal funds rate changes, with the funds rate usually slightly higher. Usually, the Fed's announcement of a change in the discount rate says it is due to a shift in market conditions. Of course, the Fed itself probably had a major role in influencing those conditions.

The White House has said that it does not want to see an increase in the discount rate, and that public opposition could be a factor in the Fed's timing of any rate increase. However, if the FOMC proceeds with its expected tightening and the federal funds rate goes up to, say, 9 1/2 percent or more, a discount rate increase likely would follow soon.