What happens if the Fed holds fewer policy meetings

Federal Reserve chairman Kevin Warsh is reportedly weighing whether the central bank should hold fewer policy meetings each year.

Why it matters: Cutting the Fed's meeting schedule would be the biggest change to the process of monetary policymaking in decades, reducing the procedural burden on staff but giving policymakers fewer routine opportunities to adjust interest rates as the economy changes.

Driving the news: The New York Times reported Friday that Warsh raised the idea of holding fewer meetings to discuss interest rates, citing four people familiar with the matter.

• Bloomberg later reported that he floated six rate-setting meetings each year, plus two meetings focused on broader economic issues.
• Any new schedule could be decided before the Fed's September meeting, according to the Times.

Zoom out: Warsh could make the change without congressional approval. The Federal Reserve Act requires the Fed's rate-setting committee to meet at least four times a year.

• The current eight-meeting schedule has been the norm since the 1980s.
• Next year's meeting dates, while noted as "tentative," have already been announced on the central bank's website.

Zoom in: Each of the Fed's eight scheduled policy meetings triggers weeks of staff analysis, briefing books and public communications. Fewer meetings would reduce the frequency of that process.

• It also would be consistent with Warsh's chairmanship so far: His communications strategy has been restrained on public policy guidance and in sharing his own views.
• The trade-off: If inflation unexpectedly accelerates — or the labor market suddenly weakens — the Fed might have to wait longer to act, unless it calls an unscheduled emergency meeting.