Fed Considers Cutting Policy Meetings to Six Per Year

The Federal Reserve is considering reducing its regular policy meetings to six per year. According to a recent report in The New York Times, Chair Warsh proposed this change, which would include six interest rate meetings and two additional meetings focused on substantive economic topics. This proposal comes despite the current schedule of eight regularly scheduled Federal Open Market Committee (FOMC) meetings per year.

Bank of America analysts note that federal law requires the central bank to meet at least four times annually, but suggest that markets would likely accept a shift to six policy-focused meetings. However, they warn that any changes should be announced well in advance to avoid disrupting front-end market operations, particularly for FOMC overnight index swaps and fed funds futures.

Bank of America analysts point out that the implementation of new meeting dates could temporarily reduce front-end market functioning. They recommend either settling quickly on a new meeting schedule or delaying implementation by six months or more.