Warsh Floats Reduced Fed Meetings to Cut Market Dependence

Fed Chair Kevin Warsh is considering reducing the number of meetings where the central bank sets interest rates, a significant change from its current eight-meeting schedule. The proposal follows Warsh's efforts to reshape how the Fed conducts itself, including scaling back policy guidance and encouraging markets to rely on economic data rather than signals from the Fed.

Warsh raised the idea of reducing rate-setting meetings during last week's Federal Open Market Committee meeting, asking whether there would be benefits to meeting less frequently. The current eight-meeting schedule has been in place since 1981, and fewer meetings could concentrate markets' attention on each gathering, making it a bigger event.

Some economists argue that reducing the number of 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 this approach may lead to increased volatility in financial markets during times of crisis or downturn.