Warsh Considers Fewer Fed Meetings to Reduce Market Dependence

Federal Reserve Chair Kevin Warsh is considering reducing the number of meetings where interest rates are set, a move that would be a significant change in how the central bank operates. The proposal follows a broader push by Warsh to reshape how the Fed conducts itself, including scaling back policy guidance and increasing transparency.

The current eight-meeting schedule has been in place since 1981, but some economists argue that fewer meetings would encourage policymakers to focus more on economic data between meetings and reduce the perception that every gathering requires a policy signal. However, others warn that holding fewer rate-setting meetings could concentrate markets' attention on the central bank as each gathering becomes a bigger event.

Warsh has argued that financial markets have become overly reliant on signals from the Fed rather than economic data, which is why he's pushing for a change in approach. He's also floated other changes, including potentially reducing the number of press conferences he holds after policy decisions.

Russell Rhoads, a clinical associate professor of financial management at Indiana University's Kelley School of Business, questioned the decision to reduce the number of meetings, saying 'cutting the number of meetings is going in the wrong direction.' He noted that increased transparency has led to decreased volatility around Fed meetings.