The president of the Federal Reserve of the United States (Fed), Kevin Warsh, has announced that the central bank will reduce the number of formal monetary policy decisions, which will go from eight to six starting in 2028. As a transition phase, in 2027 seven reviews of the interest rate guidance will be held.
Although the calendar of eight annual meetings of the body will be maintained, starting in 2027 one of the meetings after the beginning of autumn will be reserved exclusively to discuss the general monetary policy strategy. Already in 2028, there will be two meetings focused exclusively on this type of strategic analysis.
Warsh has defended the modification by underlining that the Federal Open Market Committee (FOMC, by its acronym in English) needs to have more room to "reflect again on important issues and to project our gaze long-term on the left side of the decimal point" of interest rates.
"This is an institutional decision that affects the nature and quality of our deliberations and, ultimately, the soundness of our decisions. It is one more change to steer the conduct of monetary policy," has said the one many consider the "guardian of the dollar".
For now, the president of the Fed has not detailed what specific content the meetings in which decisions on interest rates are not adopted will address, and has advanced that after those sessions no official statement will also be issued.
"The decision on the new meeting format is relatively recent. It was the subject of an exhaustive debate over several sessions. As we have more details -which will not happen until next autumn-, we will be prepared to share them with you," has indicated.
Kevin Warsh assumed the presidency of the Fed just five months ago and since his arrival made clear his purpose of promoting an internal reform of the institution. To this end, he launched different working groups focused on areas such as communication, balance sheet, data, productivity and employment, as well as on the inflation framework.
In these first months at the helm of the central bank, Warsh has been reluctant to provide more information than is strictly necessary to the markets regarding interest rates. With the reduction in the number of meetings with rate decisions, he also reduces the signals that investors receive through forecasts and subsequent press conferences.