Warsh Considers Reducing Frequency of Fed Policy Meetings
Federal Reserve Chair Kevin Warsh is considering reducing the frequency of the central bank’s policy meetings, a move that could represent the most significant change to the Fed’s operating model in decades. The 12-member Federal Open Market Committee meets eight times a year to vote on whether to raise, lower or hold borrowing costs. The New York Times reported that four people familiar with the discussions, none of whom were authorized to speak publicly, said Warsh raised the idea during this week’s Fed meeting. Warsh was presiding over his second meeting as chair. He gave the impression that a revised schedule could be finalized before the next meeting in mid-September, although any change might not take effect until later, according to the report. Warsh asked officials to develop ideas rather than conduct a full discussion of the meeting schedule during this week’s session. Reducing the number of meetings—and therefore the number of interest-rate votes—would be the most far-reaching change of Warsh’s tenure so far. It would break with decades of practice, reshape how the Fed guides the economy and could slow its response to changes in inflation and the labor market. Fewer meetings would also reduce the amount of information available to Wall Street and the public about the Fed’s thinking on the path of interest rates, reversing a decades-long trend toward greater transparency. The proposal would fit a broader pattern emerging early in Warsh’s chairmanship. He has sharply shortened the Fed’s post-meeting policy statements and substantially reduced the detail provided about his economic views and the appropriate path for interest rates. He has also floated reducing the size of the post-meeting news conferences, which became a Fed practice in January 2019. Since taking over as Fed chair in May, Warsh has sought to portray himself to the public and within the central bank as someone prepared to undertake major reforms at an institution he has criticized for years. His central argument in seeking the job was the need for “institutional change.” So far, that effort has included the creation of five working groups focused on issues ranging from how the Fed communicates with the public to which data sources it prioritizes. The Fed has published meeting dates for the rest of this year and for 2027. Its website notes that “each meeting date is tentative until confirmed at the preceding meeting.” The 1935 Banking Act, which established the Fed’s modern structure, requires the FOMC to meet at least four times a year. The Fed chair may call a meeting, and any three committee members may also do so. The Fed can hold emergency meetings in response to sudden events. Historically, it has relied on between-meeting policy adjustments mainly during crises, such as the pandemic. The Fed adopted its current schedule of eight meetings a year in 1981, when Paul Volcker was chair. The meetings occur roughly every six weeks. The schedule has remained in place since then, although the committee has held emergency meetings in person or by telephone during crises. That stable schedule has created a predictable rhythm for Fed officials and staff, as well as for investors and forecasters who track central-bank decisions. Fed staff prepare briefing materials and forecasts—known as the “Tealbook”—before each meeting. Meeting minutes are released three weeks after a meeting, while the full transcripts and briefing materials are published five years later. The Fed has previously discussed changing its meeting schedule. In a 1988 memorandum, two senior Fed staff members, including Donald Kohn, who later became vice chair, weighed the advantages and disadvantages of meeting more frequently. They cited “the opportunity to review new information in a more timely fashion” as well as “more preparation and travel inconvenience.” They ultimately concluded that a schedule of eight meetings “might still be regarded as adequate.” Separately, Fed officials held the benchmark interest rate steady for a fifth consecutive meeting this week by a 9-3 vote. The policy-rate range remained at 3.5% to 3.75% throughout the year. But more officials have signaled support for rate increases as renewed tensions in the Middle East and an artificial-intelligence-driven investment boom again raise inflationary pressure. On Friday, the three officials who dissented warned that delaying action against inflation could force the Fed to adopt more aggressive policy later. They said inflation would remain above the Fed’s 2% target if short-term borrowing costs were not raised immediately. Inflation has remained above that level for more than five years, they said. Cleveland Fed President Beth Hammack said in a statement issued by her regional Fed bank: “Inflation has been stubbornly above 2% for more than five years, and I am not confident that it will return to our target on its own. A higher federal funds rate would help moderate economic activity and reduce inflationary pressure.” Given the stability of the labor market, she said, the economy could withstand higher rates. “I favored taking action at the most recent meeting because I believe the current policy stance is not sufficiently restrictive,” she said. Minneapolis Fed President Neel Kashkari also expressed concern about inflation in a separate statement. He said the FOMC should have raised rates on Wednesday as the start of a series of increases. “To guard against the risk of high inflation becoming entrenched, I favored gradually tightening policy while gathering more data on inflation and employment,” Kashkari wrote. “If inflation remains elevated, in my view, a series of small policy adjustments is preferable to waiting and then taking more aggressive action.” Dallas Fed President Lorie Logan also said current monetary policy was not exerting downward pressure on inflation. Without any policy restraint, inflation would likely continue to run above target until an unexpected shock occurred, Logan said. The FOMC cannot count on an unexpected shock to achieve its goal, she said, and if such a shock occurs, policymakers can always adjust policy. Like Kashkari, Logan said that “modest” rate increases in the near term could reduce the likelihood that more forceful action would be needed later.
The 12-member Federal Open Market Committee meets eight times a year to vote on whether to raise, lower or hold borrowing costs. The New York Times reported that four people familiar with the discussions, none of whom were authorized to speak publicly, said Warsh raised the idea during this week’s Fed meeting.
Warsh was presiding over his second meeting as chair. He gave the impression that a revised schedule could be finalized before the next meeting in mid-September, although any change might not take effect until later, according to the report. Warsh asked officials to develop ideas rather than conduct a full discussion of the meeting schedule during this week’s session.
Reducing the number of meetings—and therefore the number of interest-rate votes—would be the most far-reaching change of Warsh’s tenure so far. It would break with decades of practice, reshape how the Fed guides the economy and could slow its response to changes in inflation and the labor market.
Fewer meetings would also reduce the amount of information available to Wall Street and the public about the Fed’s thinking on the path of interest rates, reversing a decades-long trend toward greater transparency.
The proposal would fit a broader pattern emerging early in Warsh’s chairmanship. He has sharply shortened the Fed’s post-meeting policy statements and substantially reduced the detail provided about his economic views and the appropriate path for interest rates. He has also floated reducing the size of the post-meeting news conferences, which became a Fed practice in January 2019.
Since taking over as Fed chair in May, Warsh has sought to portray himself to the public and within the central bank as someone prepared to undertake major reforms at an institution he has criticized for years. His central argument in seeking the job was the need for “institutional change.” So far, that effort has included the creation of five working groups focused on issues ranging from how the Fed communicates with the public to which data sources it prioritizes.
The Fed has published meeting dates for the rest of this year and for 2027. Its website notes that “each meeting date is tentative until confirmed at the preceding meeting.”
The 1935 Banking Act, which established the Fed’s modern structure, requires the FOMC to meet at least four times a year. The Fed chair may call a meeting, and any three committee members may also do so.
The Fed can hold emergency meetings in response to sudden events. Historically, it has relied on between-meeting policy adjustments mainly during crises, such as the pandemic.
The Fed adopted its current schedule of eight meetings a year in 1981, when Paul Volcker was chair. The meetings occur roughly every six weeks. The schedule has remained in place since then, although the committee has held emergency meetings in person or by telephone during crises.
That stable schedule has created a predictable rhythm for Fed officials and staff, as well as for investors and forecasters who track central-bank decisions. Fed staff prepare briefing materials and forecasts—known as the “Tealbook”—before each meeting. Meeting minutes are released three weeks after a meeting, while the full transcripts and briefing materials are published five years later.
The Fed has previously discussed changing its meeting schedule. In a 1988 memorandum, two senior Fed staff members, including Donald Kohn, who later became vice chair, weighed the advantages and disadvantages of meeting more frequently. They cited “the opportunity to review new information in a more timely fashion” as well as “more preparation and travel inconvenience.” They ultimately concluded that a schedule of eight meetings “might still be regarded as adequate.”
Separately, Fed officials held the benchmark interest rate steady for a fifth consecutive meeting this week by a 9-3 vote. The policy-rate range remained at 3.5% to 3.75% throughout the year. But more officials have signaled support for rate increases as renewed tensions in the Middle East and an artificial-intelligence-driven investment boom again raise inflationary pressure.
On Friday, the three officials who dissented warned that delaying action against inflation could force the Fed to adopt more aggressive policy later. They said inflation would remain above the Fed’s 2% target if short-term borrowing costs were not raised immediately. Inflation has remained above that level for more than five years, they said.
Cleveland Fed President Beth Hammack said in a statement issued by her regional Fed bank: “Inflation has been stubbornly above 2% for more than five years, and I am not confident that it will return to our target on its own. A higher federal funds rate would help moderate economic activity and reduce inflationary pressure.” Given the stability of the labor market, she said, the economy could withstand higher rates. “I favored taking action at the most recent meeting because I believe the current policy stance is not sufficiently restrictive,” she said.
Minneapolis Fed President Neel Kashkari also expressed concern about inflation in a separate statement. He said the FOMC should have raised rates on Wednesday as the start of a series of increases. “To guard against the risk of high inflation becoming entrenched, I favored gradually tightening policy while gathering more data on inflation and employment,” Kashkari wrote. “If inflation remains elevated, in my view, a series of small policy adjustments is preferable to waiting and then taking more aggressive action.”
Dallas Fed President Lorie Logan also said current monetary policy was not exerting downward pressure on inflation. Without any policy restraint, inflation would likely continue to run above target until an unexpected shock occurred, Logan said. The FOMC cannot count on an unexpected shock to achieve its goal, she said, and if such a shock occurs, policymakers can always adjust policy.
Like Kashkari, Logan said that “modest” rate increases in the near term could reduce the likelihood that more forceful action would be needed later.