The Federal Reserve held interest rates steady as expected, with two officials dissenting in favor of a quarter-point increase. Chairman Kevin M. Warsh emphasized the central bank's flexibility to gather more data before acting, citing stable inflation expectations and no signs of an overheating economy. In a major announcement, Warsh revealed a new meeting schedule: in 2027, the Fed will hold seven rate-setting meetings and one dedicated to broad monetary policy strategy. By 2028, that will shift to six rate votes and two strategy sessions. Warsh argued the change allows for deeper strategic deliberation amid an "intellectually diverse" group. He noted tighter credit conditions for some businesses and households, which he said supports the Fed's goals without signaling overly tight financial conditions. The decision came days before midterm elections, but Warsh insisted politics played no role, despite President Trump’s repeated attacks on the Fed and his ongoing effort to fire Governor Lisa D. Cook over mortgage fraud allegations. The S&P 500 rose 0.3% following the announcement.
Starting next year, the Federal Reserve will reduce the number of meetings at which it votes on interest rates. The Fed’s policy committee currently meets eight times a year, a practice since the 1980s. While 2025 will still feature eight meetings, only seven will include rate votes; the eighth will focus solely on monetary policy strategy. In 2028, the Fed plans just six rate-setting meetings, with two dedicated to long-term strategy. Warsh stated the goal is to balance timely policy assessment with space for strategic reflection. Some economists have criticized the change, arguing it may reduce responsiveness to economic shifts.
Source: New York Times Business · Summarized by HeadlinesBriefing