Kevin Warsh, Chair of the U.S. Federal Reserve, is considering reducing the frequency of meetings held by the Federal Open Market Committee (FOMC) that determine interest rates.
According to a report by Yonhap News Agency citing the New York Times (NYT), Warsh mentioned the possibility of changing the meeting frequency during the FOMC's regular meeting held on July 28-29. The NYT reported this based on information from four sources familiar with the discussions.
Currently, the Fed holds FOMC meetings eight times a year, approximately every six weeks, to decide on interest rates and other monetary policies. Following these meetings, a statement regarding interest rate decisions is released, and in some instances, a press conference with the Chair is conducted. Detailed minutes of the meetings are published three weeks later.
If the number of meetings is reduced, it would mark a significant change in the operation of the U.S. central bank, which adopted the 'eight meetings a year' system during Paul Volcker's tenure in 1981.
The Banking Act of 1935, which defines the current structure of the Fed, mandates that the FOMC hold a minimum of four meetings annually, so a reduction in the number of meetings would not pose any legal issues.
However, concerns have been raised that fewer meetings could lead to a decrease in opportunities to make monetary policy decisions, potentially delaying responses to changes in inflation and employment conditions.
Additionally, the NYT pointed out that a reduction in meetings could diminish the policy signals provided to the market and the public through post-meeting statements and press conferences, potentially reversing decades of increased transparency.
Since taking office in May, Warsh has been advocating for reforms in the Fed's communication strategies and limiting forward guidance on future monetary policy, aiming to overhaul communication methods and overall organizational operations.
The Fed is currently forming a task force of external experts to review issues across five areas, including communication, data, and the balance sheet.
The Fed declined to comment on this matter, according to the NYT.
* This article has been translated by AI.
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