Warsh Weighs Cutting FOMC's 8 Meetings as Investors Warn of Higher Volatility
Updated
Updated · CNBC · Aug 5
Warsh Weighs Cutting FOMC's 8 Meetings as Investors Warn of Higher Volatility
3 articles · Updated · CNBC · Aug 5
Summary
A possible cut to the FOMC’s eight annual meetings is under discussion at the Fed, extending Kevin Warsh’s push to reduce guidance and the central bank’s day-to-day influence on markets.
Warsh has already shortened policy statements, curbed forward guidance and skipped submitting his June rate “dot,” leaving investors with less clarity on how the Fed will react to incoming data.
Market veterans split on the impact: DWS and TS Lombard warned fewer meetings could trigger continuous repricing and a jump in volatility, while former Fed officials said six meetings could still work if communication stayed robust.
Bond investors see bigger risks than stocks, with some warning reduced meeting frequency could steepen the yield curve and complicate financing for $31.1 trillion of publicly held Treasury debt.
Markets have so far taken the shift in stride—the Dow is up about 7% since Warsh took over on May 22—but his late-August Jackson Hole speech is shaping up as the next key test.