Warsh Considers Shrinking Fed's Footprint in Financial Markets

Federal Reserve Chairman Kevin Warsh is exploring ways to reduce the central bank's influence on financial markets. A report from Barclays suggests that he may consider cutting the number of scheduled FOMC meetings, which could reflect a broader effort to rethink the Fed's role in asset prices and market expectations.

The Federal Reserve Act requires the FOMC to meet at least four times a year, but the committee currently holds eight meetings. In 1980, then-Chairman Paul Volcker reduced the schedule from ten meetings to eight to align with a new operating framework targeting bank reserves rather than the federal funds rate.

Barclays analysts believe that Warsh likely has the authority to change the calendar unilaterally but is unlikely to do so without broad committee support. They also note that fewer meetings could leave the committee 'less nimble in responding to evolving economic conditions' and reduce opportunities to explain how policymakers are interpreting incoming data.