Warsh Eyes Rate-Setting Meeting Cuts Amid Market Dependence Concerns

Federal Reserve Chair Kevin Warsh is considering reducing the number of meetings where interest rates are set, according to reports. This proposal would be a significant change in how the central bank operates, as it has met eight times a year since 1981.

Warsh raised the idea during last week's Federal Open Market Committee meeting and asked if there would be benefits to meeting less frequently, the New York Times reported. He has argued that financial markets have become overly reliant on signals from the Fed rather than economic data, which is why he wants to scale back policy guidance.

Some economists agree with Warsh's view, saying 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 argue that holding fewer rate-setting meetings could concentrate markets' attention on the central bank as each gathering becomes a bigger event.

Warsh has already taken steps to reduce market dependence on the Fed's guidance, such as releasing shorter statements after meetings and offering less insight into his thinking on inflation and interest rates. He has also floated other changes, including potentially reducing the number of press conferences he holds after policy decisions.