A major change after decades: Will the Federal Reserve reduce the number of meetings?

The Federal Reserve may be making a significant change for the first time in decades. According to media reports, Fed Chair Walsh is considering reducing the number of interest rate decision meetings held each year.

The reason is that he feels the current market relies too heavily on the Fed's actions. He believes investors should rely more on economic data, such as CPI inflation data and non-farm payrolls, rather than guessing the Fed's next move every day. This aligns with Walsh's current approach of reducing public speeches and forward guidance.

Currently, the Fed holds 8 meetings a year, which is roughly once every six weeks, but the law only requires a minimum of 4 meetings. However, Walsh also believes that 4 times is too few. Therefore, the final adjustment might be to 6 meetings.

The benefit of this approach is that it can reduce the market's excessive dependence on the Fed and enhance policy independence.

However, the downside is that if the Fed reduces communication, it might actually increase market uncertainty and volatility, just like what we are seeing now. Without rate hikes or future guidance from the Fed, Treasury yields have experienced significant fluctuations.

Anyway, the market needs to adapt to Walsh's changes as soon as possible. What remains unchanged is that the market still needs to watch US data, and it has become even more important.

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