Kevin Warsh Plans Fewer Fed Rate Decisions as Central Bank Sets Aside Meetings for Long-Term Strategy — Rate Votes Drop to Six by 2028
Federal Reserve Chair Kevin Warsh unveiled a plan on Wednesday to overhaul how the central bank meets, setting aside time for long-term strategy instead of rate decisions.
Fewer Rate-Setting Meetings By 2028
Starting next fall, one of the Fed’s eight annual meetings will focus on monetary policy strategy, with no vote on the federal funds rate and no policy statement.
Warsh said he expects two strategy meetings and six policy-setting meetings in 2028.
The Fed needs “time and space” for “thinking anew about big questions,” Warsh said. He added that the schedule is “an institutional choice” that shapes “the wisdom of our decisions.”
Market commentator The Kobeissi Letter said the overhaul “will mark one of the biggest changes to the Fed’s monetary policy process in decades.”
Tighter Financial Conditions
The Fed held its benchmark rate at 3.75%-4% on Wednesday, while Warsh said inflation remains “too high.”
Consumer prices rose 3.7% in September from a year earlier, up from 3.4% in August, according to the Bureau of Labor Statistics.
The CME FedWatch tool shows a 79.6% chance of a rate hike at the Fed’s December meeting, and Warsh declined to commit to one.
Bond Yields Rise
The 10-year Treasury yield rose to a high of 5.049% on Wednesday, and was trading at 4.999% at the time of writing, according to TradingView. It touched a 24-year high of 5.365% on Oct. 7.
The 30-year yield, which touched 5.733% in early October, was currently trading at 5.329%, while the two-year yield, which tracks Fed expectations most closely, reached a high of 4.787% after the Fed announcement. It was at 4.671% at the time of writing.
Price Action: The iShares 7-10 Year Treasury Bond ETF (NASDAQ:IEF) closed 0.27% lower on Wednesday at $90.85 and climbed 0.22% to $91.15 in premarket trading on Thursday, according to Yahoo Finance. The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) closed 0.78% lower at $80.99 and rose 0.47% to $81.37 in premarket.
Benzinga Edge rankings indicate the 7-10 year Treasury Bond ETF has a Momentum score in the 30th percentile and a positive short-term price trend. Over the medium and long term, the ETF has a negative price trend.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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