Kevin Warsh mulls fewer Fed meetings

Kevin Warsh is considering whether the Federal Reserve should hold fewer scheduled policy meetings than the eight it now conducts each year, according to CNBC. The idea would alter one of the central bank’s most established rhythms: regular decision dates, statements and follow-up communication to markets. The Federal Reserve’s own website says the Federal Open Market Committee holds eight regularly scheduled meetings a year, with minutes from those meetings released three weeks after the policy decision. Markets have already been adjusting to Warsh’s broader effort to provide less guidance than recent Fed leaders offered. ### How different would this be from the Fed’s current setup? The Federal Reserve says the FOMC now meets on an eight-meeting schedule each year, with policy statements tied to those dates and minutes released afterward. That cadence has given investors, banks and companies a predictable map for when the Fed is most likely to change rates or clarify its thinking. (cnbc.com) CNBC reported on August 5 that Warsh has floated cutting the number of policy meetings below that current eight. The network said the proposal would extend a broader strategy of reducing the central bank’s communication with financial markets, and it cited Minneapolis Fed President Neel Kashkari and Philadelphia Fed President Anna Paulson as open to discussing the issue. (federalreserve.gov) ### What has Warsh said in public about speaking less? July 29 was Warsh’s second FOMC press conference as chair, according to the official transcript posted by the Fed. In that appearance, he said his second committee meeting as chairman had come quickly and described colleagues as focused on sharpening the Fed’s performance. CNBC reported before that press conference that Warsh had vowed to say less than his predecessors and had teased the idea of ending news conferences after every FOMC meeting. (cnbc.com) That would leave investors with fewer routine opportunities to hear the chair explain how policymakers are reading inflation, growth and labor-market data. American Banker separately reported that Warsh had acknowledged limited guidance may have contributed to rising market rates, while arguing any added volatility was offset by the benefits of what he called a more nimble central bank. (federalreserve.gov) ### Why did bond markets react so quickly? Bond yields rose after Warsh’s second press conference last week, American Banker reported. (cnbc.com) The publication said bankers may have to accept higher rates as the cost of a more parsimonious Fed, and that lenders were increasingly pricing for a higher-for-longer path. CNBC said investors were already bracing for more volatility if the Fed reduced the number of scheduled meetings while also offering less frequent guidance. (americanbanker.com) In practical terms, fewer fixed decision points can leave traders and lenders with less certainty about when the next policy signal will arrive. That inference follows from the current structure of scheduled meetings, statements and minutes described on the Fed’s website. (americanbanker.com) ### Which Fed officials are part of this discussion? Neel Kashkari of Minneapolis and Anna Paulson of Philadelphia have expressed at least a willingness to discuss fewer meetings, CNBC reported. Their comments matter because the debate is not being framed solely as a communications issue; it also touches how the committee organizes its formal decision-making calendar. (cnbc.com) The FOMC’s official materials show that meeting statements, economic projections in selected months and minutes are all built around the existing schedule. Any change would therefore affect not just the number of rate-setting gatherings, but the timing of those documents as well. ### What should readers watch next? The Federal Reserve’s calendars page will show whether the committee changes its meeting structure, and the Board’s press-release page is where any future FOMC statements or schedule-related announcements would appear. (cnbc.com) Minutes from regularly scheduled meetings are released three weeks after the policy decision, the Fed says, making those documents the next formal place to watch for how officials discuss communication and meeting frequency. (federalreserve.gov)