Fed Chair Warsh weighs cutting FOMC meetings from 8 per year

Federal Reserve Chair Kevin Warsh is considering reducing the number of Federal Open Market Committee meetings at which the benchmark interest rate is set, The New York Times reported Friday (local time).

The New York Times cited four people familiar with the matter as saying Warsh raised the idea of changing the frequency of FOMC meetings at the regular session held Aug. 28-29.

The Fed currently holds eight FOMC meetings a year, roughly every six weeks, each lasting two days, at which it sets the benchmark interest rate and other monetary policy. A statement on the rate decision is released immediately after each meeting, and some sessions are followed by a press conference by the chair. Detailed minutes are made public three weeks later.

A reduction in the number of meetings would represent the most significant change to the central bank's operations in 45 years — since the FOMC adopted its current eight-meetings-a-year schedule under Chair Paul Volcker in 1981.

The Banking Act of 1935, which established the Fed's current structure, requires the FOMC to meet at least four times a year, meaning a reduction would raise no legal issues. Critics warn, however, that fewer meetings would mean fewer opportunities to adjust monetary policy, potentially slowing the Fed's response to changes in inflation and employment conditions.

The New York Times also said the move could reverse decades of progress toward greater transparency, as fewer post-meeting statements and press conferences would reduce the policy signals available to markets and the public.

Warsh, who took office in May, has been pushing for broad reforms to the Fed's communications and organizational operations — including changes to how it engages with markets and limits on forward guidance about future monetary policy. He has assembled an external task force to review five areas, including Fed communications, data and the balance sheet.

The Fed declined to comment, The New York Times said.