The Federal Reserve is considering a change to its regular meeting cadence that would cut the number of policy-focused sessions to six each year, while retaining two additional gatherings oriented toward substantive economic topics, according to reporting cited by market analysts.
Proposal details - The suggested modification, attributed to the Fed chair, would compress the Federal Open Market Committee's (FOMC) conventional interest-rate decision meetings to six annually and create two separate meetings focused on deeper economic analysis. Currently, the Fed convenes eight regularly scheduled FOMC meetings each year. Federal law requires the central bank to meet at least four times per year.
Market implications and Bank of America view - Bank of America said in a note that markets would likely accept a move to six policy-focused meetings. However, the firm cautioned that the Fed should communicate any calendar changes well ahead of implementation to prevent disruption of front-end market functions, particularly trading and liquidity in instruments tied to meeting expectations.
Bank of America highlighted two market instruments of special concern: FOMC overnight index swaps (OIS) and fed funds futures. Both are concentrated in short-dated activity, with OIS swaps seeing the heaviest trading in the zero-to-three-month window and fed funds futures showing largest open interest in the nearest contracts - the first, second, and the third through sixth contracts. OIS swaps also tend to exhibit notable activity around the six-month horizon.
Risks to near-term market functioning - Analysts warned that a rapid shift to a new meeting schedule could temporarily impair front-end market functioning. Dealers might scale back market-making in 2027 FOMC OIS until the new calendar is formally confirmed, and fed funds futures trading could see reduced risk-taking and liquidity while traders assess meeting-date uncertainty.
To mitigate such dislocations, Bank of America recommended either a quick settlement on a revised meeting schedule or delaying the change by six months or more to give markets time to adapt.
Global central bank context provided by analysts - Bank of America noted that most major global central banks operate with eight meetings per year. It observed that the Swiss National Bank and Norges Bank meet four times annually. The European Central Bank and the Bank of England moved to an eight-meeting rhythm in 2015 and 2016, respectively, with the ECB giving six months' notice and the BoE providing 13 months' notice. The Reserve Bank of Australia adopted eight yearly meetings in January 2024 after announcing the change in July 2023.
Takeaway - The proposal would reshape how monetary policy decisions are scheduled and communicated. While markets may ultimately accept a six-meeting policy cadence, orderly implementation and clear communication are necessary to limit temporary frictions in short-dated rate instruments that price FOMC expectations.