Warsh's Plan to Cut FOMC Meetings Sparks Concern on Wall Street

Fed Chair Kevin Warsh has been making waves in his first few months on the job. Since being sworn in as Fed chair on May 22, he's proposed a slew of changes to America's premier financial institution.

Among these changes are plans to deleverage the Federal Reserve's $6.74 trillion balance sheet and alter how policymakers think about inflation.

Warsh has also removed forward-looking guidance from FOMC meeting statements, which some see as a break from tradition.

But in a recent move that could have far-reaching consequences, Warsh has hinted at reducing the number of annual FOMC meetings. Currently, the Fed meets for two days every six weeks (about eight times per year), and cutting back on these meetings would likely lead to even less transparency for markets.

The impact of this potential change could be significant. Without forward-looking guidance, bond traders have already been selling 10-year and 30-year Treasury bonds, pushing up yields and borrowing costs.

In fact, the U.S. 30-year yield has soared to its highest level since 2007. The stock market relies on the central bank for credibility, and with less transparency and guidance, wild swings in the Dow, S&P 500, and Nasdaq Composite may become more commonplace.