Fed Chair Warsh Weighs Reducing FOMC Meetings From Eight a Year

Federal Reserve Chair Kevin Warsh is considering reducing the number of regular Federal Open Market Committee meetings that set the benchmark interest rate.

The New York Times reported on July 31 that Warsh proposed lengthening the interval between scheduled FOMC meetings at a recent meeting. He also signaled that the overhaul could be finalized before the next meeting in mid-September.

The Fed currently holds eight scheduled meetings a year to set interest rates. Under the Banking Act of 1935, the minimum requirement is four meetings annually. The current eight-meeting schedule was established in 1981 under then-Chair Paul Volcker and has remained in place for more than 40 years.

A reduction in the number of meetings would extend a broader overhaul of monetary policy operations that Warsh has pursued since taking office. Since becoming chair in May, he has shortened post-meeting policy statements and considered simplifying the press conferences that follow, trimming the Fed’s public messaging.

Still, longer gaps between meetings could slow the central bank’s response to changes in inflation and employment data. Less information about the Fed’s policy stance could also increase volatility in financial markets.