By Michael S. Derby
NEW YORK, Oct 28 (Reuters) - Federal Reserve Chairman Kevin Warsh said on Wednesday the central bank will begin setting aside one of its eight regularly scheduled policy meetings next year and two in 2028 to weigh major issues facing the institution and will not use them to consider changes in monetary policy.
“We believe eight meetings per year is the right number for the (Federal Open Market Committee), but in 2027, one meeting will focus exclusively on broad monetary policy strategy,
with neither a vote on the federal funds rate nor a policy statement anticipated,” Warsh said at a press conference.
“The rest will be regular FOMC policy setting meetings, and I expect that in 2028 we'll have two meetings dedicated to discussions of strategy and six ... for setting policy.”
“Getting policy right involves assessing near-term developments at timely, regular and information-rich intervals,” Warsh 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, focusing, as I say, on the left side of the decimal point,” the Fed leader said.
The shift in how the Fed will use its calendar may reduce its ability to respond to fast-moving changes in the economy, though the central bank retains the ability to change monetary policy outside of FOMC meetings, which it has done intermittently through the years, most recently in early 2020 as the COVID-19 pandemic took hold. It's unclear how these new meetings will affect other Fed policy review processes.
It is the latest step in Warsh’s overhaul of monetary policy conduct and how it is communicated to the public. The Fed leader does not give so-called forward guidance on the outlook and does not submit personal forecasts to the central bank’s quarterly projections.
Warsh, who became Fed chair in May, has also overseen a notable shortening in the statement the central bank releases at the end of FOMC meetings, and has been truncating the length of press conferences after the FOMC meetings.
Reporters asked Warsh at the press conference what sort of disclosure might emerge from FOMC meetings devoted to deeper policy dives, and suggested the issue was still under consideration.
The Fed leader said “it’s not obvious” what the Fed will say after these meetings. “The decision on the new format for the meetings is relatively new” and “as we get details of that … we'll be prepared to share them with you.”
While Warsh offered no guidance about which FOMC meetings would be taken off the table for policy action, Omair Sharif, president of forecasting firm Inflation Insights, said he believed next year’s October meeting will be the first with no rate deliberations, given that it falls between two meetings that include quarterly forecasts.
“That would mean a 12-week gap between any policy changes, but it would also mean they would have two sets of inflation reports, among other data, given the 2027 release schedule as opposed to just one,” Sharif told clients in a note.
(Reporting by Michael S. Derby; Editing by Nia Williams and Howard Goller)
