Fed Reserves Strategy Meetings as Gundlach Urges Rate Hikes

The Federal Reserve will devote more of its scheduled meetings to long-term monetary policy discussions beginning in 2027, Chairman Kevin Warsh announced October 28, 2026, after policymakers kept US interest rates unchanged. The decision preserves the central bank's eight annual gatherings while reducing the number dedicated to setting rates, as officials balance economic conditions against longer-term policy priorities.

According to the Federal Reserve's October policy announcement, the benchmark federal funds rate remains between 3.75% and 4%. The decision drew two dissents from Federal Open Market Committee members: Governor Lisa Cook and Cleveland Fed President Beth Hammack favored a quarter-percentage-point increase.

Under Warsh's revised schedule, one of the eight meetings in 2027 will focus exclusively on monetary policy strategy rather than a rate-setting vote. In 2028, two meetings will be reserved for strategic discussions, leaving six focused on interest-rate decisions. NBC News reported that the committee has maintained eight scheduled meetings annually since 1981.

Warsh said the revised calendar would give policymakers more time to evaluate longer-term economic questions without abandoning regular assessments of current conditions.

"Getting policy right involves assessing near-term developments at timely, regular and information-rich intervals," Warsh said. "But it's equally important we reserve time and space as an intellectually diverse group for strategic deliberations, for thinking anew about big questions, looking out over longer time horizons."

The chairman began seriously discussing fewer rate-setting meetings in July, according to FOMC meeting minutes cited by NBC News. Supporters of the approach argue that longer intervals between rate decisions could allow officials to collect more economic data, while critics have historically raised concerns that fewer decisions could make the central bank slower to respond to sudden economic changes.

The change also distinguishes the Fed's approach from those of other major central banks, including the Bank of England and Bank of Japan. Warsh, who took over as chairman in May after being nominated by President Donald Trump, has also shortened the FOMC's post-meeting statements and rejected routine forward guidance on future monetary policy.

Warsh reiterated that position at the October 28 news conference, saying the Fed should generally avoid signaling its future policy path outside exceptional circumstances.

"I don't believe in forward guidance, absent exigent circumstances, absent a crisis," Warsh said.

He acknowledged that forward guidance had been useful during the 2008 financial crisis but argued against relying on it during ordinary economic conditions, particularly when the economy is strong.

Warsh also addressed the effect of borrowing costs on investment in artificial intelligence infrastructure. He said interest rates were influencing investment decisions and that credit spreads had widened for some assets, although financial conditions had not tightened significantly across the board. He added that capital spending remained strong and was spreading across a broader range of economic sectors.

Outside the Fed, bond investor Jeffrey Gundlach criticized the decision to leave rates unchanged, arguing that inflationary pressures and economic strength justified further tightening. Speaking to CNBC's Closing Bell after Warsh's news conference, the DoubleLine Capital chief executive pointed to the difference between the federal funds rate and the two-year Treasury yield.

"What are you waiting for? You just upgraded the economy right here," Gundlach said, referring to Warsh's assessment of economic conditions.

The two-year Treasury yield, which is sensitive to expectations for Fed policy, was trading at approximately 4.714%, according to CNBC's October 28 coverage. Gundlach argued that the gap between that yield and the Fed's benchmark range indicated that policymakers should raise rates rather than maintain their current position.

"I just think that the Fed is a little bit behind the curve right now," Gundlach said.

Gundlach had previously argued that the Fed should have delivered a larger increase in September, favoring a half-percentage-point move rather than the quarter-point increase implemented that month. He also said the central bank would need to raise rates again in December unless oil prices fell meaningfully.

"Absent a crack in the oil price, I think they have to hike in December," Gundlach said.

US oil prices remained above $100 per barrel on October 28, according to CNBC. The Fed, however, said future decisions would depend on incoming economic information and reiterated its objective of returning inflation to 2%. Warsh emphasized that the next policy move could not be determined in advance.

Gundlach also said the change to the Fed's meeting schedule was unsurprising, although he supported reducing the number of rate-setting meetings to six immediately. The Fed's revised timetable will instead begin in 2027, with a second strategy-focused meeting added in 2028.