The Federal Reserve held interest rates at 3.75% to 4.00% on Wednesday, but Chair Kevin Warsh also announced a change to the central bank's rate-setting calendar that will reduce the number of scheduled policy votes in coming years.
Starting in 2027, only seven of the Fed's eight meetings will set rates, with one meeting dedicated to strategy. Warsh said he expects six of eight meetings to set rates in 2028.
Strategy meetings without policy statements or rate votes
Warsh said the strategy-only meeting would give Federal Open Market Committee members room to debate long-term questions. Those meetings would carry no policy statement and no vote on the benchmark federal funds rate.
He argued that the calendar itself matters. "I believe the setting of the meeting schedule and agenda is more than some administrative detail," Warsh said in remarks carried by CNBC.
The Fed has used eight yearly meetings since 1981, with four as the minimum.
Hold was not unanimous
The decision to hold rates was not unanimous. Fed Governor Lisa Cook and one other official dissented in favor of a hike, making the vote 10-2.
Warsh said first-half growth estimates rose to 2.4% from 1.8%, and inflation has topped target for nearly six years. He said new data over the coming weeks will sharpen the December call on raising rates. Morgan Stanley had warned beforehand that the hold won't end hikes.
With a December hike under debate, fewer decision days may make each vote a bigger event for traders. That read weakens if strategy meetings still move expectations, though Warsh said he does not expect policy decisions from them.
Politics and Fed independence
Warsh told reporters politics played no role in the decision, Reuters reported. Elections that decide congressional control arrive Nov. 3.
President Donald Trump has tried to remove Cook for over a year. The White House has scheduled a possible proceeding against her for Nov. 5.
A thinner calendar could therefore squeeze the hike debate into fewer votes. In contrast, the White House keeps pressing against hikes, and the Fed's independence is on the line.
