Starting next year, the Federal Open Market Committee will make policy decisions at seven meetings, not the usual eight, Federal Reserve Chair Kevin Warsh said Wednesday after the Fed's decision to keep rates unchanged.
"Quashing inflation is not about a fixed calendar date," he said. Note that the Fed has always had the ability to adjust its rate outside the regular meeting dates.
In 2027, one meeting per year will focus on strategy without setting policy, he said. That will likely change to two meetings in 2028, he said, implying only six policy decisions will be made.
The decision about the format of the strategy meeting is "quite new." The committee hasn't yet decided on whether it will make any kind of announcement after that meeting.
Regarding the Fed's assessment of the U.S. economy, economic growth has strengthened, with Q3 GDP growth appearing to expand at over 3%. High tech is leading the growth, with other categories also contributing, the Fed chair said.
On the employment side of the Fed's dual mandate, the situation is positive, Warsh said.
"It's our responsibility to get inflation down," he said. We have started to see some changes in financial and credit conditions. Overall financial conditions are tighter but shouldn't be considered "tight," he said.
The FOMC is "concerned, but not surprised" by the volatility in markets.
It's the committee's job to make sure that "relative price changes in some sectors do not broaden out through the economy," Warsh said.
3:06 PM ET: Warsh said he doesn't expect to be involved in the White House inquiry into Lisa Cook. With that question, the press conference ended.
3:05 PM ET: "We are tightening financial conditions," he said. "That tells me that policy is working."
3:03 PM ET: The effects from the rate hike implemented in September were broadly in line with what the FOMC expected, he said.
3:01 PM ET: He declined to discuss whether other Fed participants' expectations for another rate increase have changed. "I don't believe in forward guidance, absent a crisis," he said.
2:59 PM ET: The head of the Fed insisted that politics played no role in today's decision. He didn't hear any reference to the elections during the Fed meeting.
2:57 PM ET: Warsh said he believes interest rates are having an effect on technology spending.
2:55 PM ET: There has been a stable correlation between oil prices and interest rates until recently, he said. However, recently, oil prices stayed elevated while rates have moderated.
"There is no soft or implicit inflation target," Warsh said, repeating that the Fed's inflation target is 2% as measured by PCE. Note that the September PCE report will be issued on Thursday.
Updated at 2:48 PM ET: On Nov. 16, the productivity and jobs task force will hold a field hearing, Warsh said. He expects the conference will last three to four hours.
Warsh said he has conducted periodic check-ins with the task forces. So far, he has seen nothing close to a final report.
"I'm impressed by what they are doing," he said. "I think some, but not all, of the groups will hit their deadline" of turning in a report by year-end, he said.
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