Fed holds rates at 3.75% to 4.00% as Warsh plans fewer rate-setting meetings

Federal Reserve Chair Kevin Warsh kept interest rates at 3.75% to 4.00% on Wednesday. Warsh announced that the Fed will reduce the number of meetings devoted to setting rates, beginning with one meeting without a rate vote in 2027. Seven of the eight meetings scheduled for 2027 will include rate decisions. Warsh expects six of eight meetings to set rates in 2028. Bitcoin (BTC) and other rate-sensitive assets could consequently have fewer scheduled market catalysts.

Warsh said strategy-only meetings would allow Federal Open Market Committee members to discuss longer-term issues. Those meetings would produce neither a policy statement nor a vote on the benchmark federal funds rate. Warsh argued that choosing meeting dates and agendas has significance beyond administration. The Fed has followed an eight-meeting annual schedule since 1981, with a minimum of four meetings.

However, Fed Governor Lisa Cook and another official voted for a rate increase, producing a 10-2 decision. Warsh said estimates for first-half growth increased from 1.8% to 2.4%. Warsh said inflation has exceeded the target for nearly six years. Warsh said incoming data over the coming weeks will help clarify the December decision on a rate increase. Morgan Stanley had warned before the decision that holding rates would not bring rate increases to an end.

Fewer rate-decision meetings may increase the market importance of each vote while a December increase remains under discussion. However, that assessment becomes weaker if strategy-only meetings still change market expectations. Warsh said policy decisions are not expected at strategy-only meetings.

Reuters reported that Warsh told reporters political considerations had not influenced the decision. Elections determining control of Congress take place on November 3. President Donald Trump has spent more than a year trying to remove Cook. The White House has scheduled a possible proceeding against Cook for November 5.

A reduced schedule could concentrate debate over rate increases into fewer votes. However, the White House continues to oppose rate increases, and the Fed's independence is at stake.