Warsh Floats Plan to Cut Fed Meetings Amid Market Over-Reliance

Kevin Warsh, Federal Reserve chair, is considering reducing the number of meetings where the central bank sets interest rates. This proposal would be a significant change from the current eight-meeting schedule, which has been in place since 1981.

Warsh raised this idea during last week's Federal Open Market Committee meeting and asked whether there would be benefits to meeting less frequently. He has argued that financial markets have become overly reliant on signals from the Fed rather than economic data.

Economists are divided on the proposal, with some arguing 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. This may lead to other members of the FOMC being further scrutinized as investors search for clues about what the Fed may do next.