Fed Chairman Warsh to Cut Rate-Setting Meetings in Favor of Strategic Sessions

The Federal Reserve intends to scale back the number of meetings it devotes to setting interest rates over the next couple of years, Chairman Kevin Warsh announced on Wednesday.

Beginning next fall, one of the central bank's eight yearly meetings will be set aside for examining wide-ranging questions about the economy instead of voting on rates. Warsh said the number of such meetings will rise to two in 2028.

He made the announcement after the Fed released its latest policy decision, which left interest rates unchanged.

Warsh said the goal is to give policymakers more room to think about long-term issues by moving their focus away from the immediate rate environment. "Getting policy right involves assessing near-term developments at timely, regular and information-rich intervals," he said. "But it's equally important we reserve time and space as an intellectually diverse group for strategic deliberations, for thinking anew about big questions, looking out over longer time horizons."

The move represents a major shake-up of the Fed's long-standing policy calendar, which investors around the world follow closely. The Federal Open Market Committee has held eight scheduled meetings each year since 1981.

According to the committee's meeting minutes, Warsh began seriously raising the idea of fewer rate-setting meetings in July. He argued that a longer gap between such meetings would let the committee gather more data about the economy.

The idea of holding fewer rate-setting meetings has been debated for years, with critics warning it could encourage shortsightedness. It was never put into practice because of concerns that the Fed would lose some of its ability to respond quickly to sudden shifts in the economy.

If carried out, the change would set the Fed apart from other major central banks, including the Bank of England and the Bank of Japan.

It is the latest significant change from Warsh, who took over leadership of the Fed in May after being nominated by President Donald Trump. He has sharply shortened the FOMC's statement released after each meeting, and he has declined to provide what is known as forward guidance, which includes forecasts about future inflation and unemployment.