Federal Reserve Chairman Kevin Warsh discussed reducing the number of meetings at which the Fed sets interest rates during the Federal Open Market Committee's (FOMC) deliberations July 28 and 29, according to multiple news reports.

The FOMC currently meets eight times a year, a schedule that has been consistent since 1981, although the committee has held additional meetings during periods of crisis. But the law requires only that the FOMC meets "at least four times each year." Warsh reportedly asked Fed colleagues for feedback on the idea of holding six rate-setting meetings per year, but no conclusion was reached.

A revised schedule, if one is agreed to, could be announced before the next FOMC meeting, which is set to be held September 15 and 16, but would likely not take effect until next year. Any change to the meeting schedule would be a monumental transformation to how the central bank operates and would likely have significant reverberations in the markets, as it would potentially reduce the amount of information available to investors and risk the Fed's ability to respond quickly to changing economic conditions. But it would be keeping with Warsh's approach to his chairmanship, in which he has repeatedly said that the Fed "overcommunicates."

At the end of the July 28-July 29 meeting, the Fed left rates unchanged on a 9-3 vote, with regional bank presidents Beth Hammack (Cleveland), Neel Kashkari (Minneapolis), and Lorie Logan (Dallas) dissenting in favor of a 25-basis-point hike. At the post-meeting press conference, Warsh said that he got the "good family fight" that he wanted and added that he was heartened by the robustness of the discussions over the two-day meeting. He reiterated his commitment to the Fed's 2% inflation target.

In a mild surprise, Warsh committed to holding press conferences after each Fed meeting through the end of 2026. But in keeping with Warsh's aim to reduce communications from the Fed to the markets, the Fed offered no forward guidance about where rates might be headed. "I take seriously that the pullback of forward guidance requires some transition," Warsh said. "Reform isn't easy, but our general judgment is going to help us make better decisions." Warsh's comments did not seem to reassure the bond market, which saw long-duration bond yields surge. The yield on a 30-year Treasury bond hit its highest level since 2007, showing some skepticism about Warsh's commitment to getting inflation back to the 2% target.

On Capitol Hill, Senate leaders released a bill on August 2 that would fund government operations from October 1 through December 11, ensuring there won't be a government shutdown before the election. The short-term patch, known as a "continuing resolution," is needed because Congress has not passed any of the 12 appropriations bills to fund the government for the upcoming fiscal year, which begins October 1. Without an extension of current funding, the government would shut down that day, which is just five weeks before the election.

The Senate bill also includes extensions of several programs that were set to expire at the end of September, including two trade deals, laws dealing with infrastructure and cybersecurity, and programs for disaster assistance, veterans, housing, and other issues. The Senate is seeking to pass the bill this week, before it breaks for a five-week summer recess. The House of Representatives, prior to starting its summer break on July 24, passed a different version of the legislation that would fund the government through December 4. Assuming the Senate passes its version this week, the House would have to vote on that bill when it returns to Washington in September.

On a party-line 50-47 vote July 30, the Senate confirmed a bloc of 74 administration nominees, including Brett Matsumoto as the new head of the BLS. The BLS, which produces key economic data like the monthly jobs report and the consumer price index (CPI) inflation measure, has been under pressure since last summer, when President Donald Trump fired the former BLS commissioner following a negative jobs report. The incident left questions about whether the BLS was being subject to political pressure to produce economic and other data that are favorable to the administration. Since August, the agency has been led by an interim head, William J. Wiatrowski, who has made significant headway in restoring some of the agency's reputation. Now Matsumoto, a career BLS economist and self-described policy nerd, will be the new face of the agency as it continues to rebuild trust with the markets.

We are now exactly three months from Election Day on November 3. We'll have a more detailed analysis of the election landscape and its potential implications for the markets later this month, but here's a quick update on where things stand:

House of Representatives: Democrats need to flip just three seats to win the majority. But the redistricting frenzy of the last nine months, which saw Texas, California, and eight other states redraw their Congressional district lines, should result in a net of about six seats for Republicans. That's still unlikely to be enough to hold off Democratic momentum.

The majority is likely to come down to just a handful of the 435 races. The non-partisan Cook Political Report, which analyzes Congressional elections, has just 18 seats rated as "toss-ups," with an additional 19 rated as "leaning" to one party or the other. In other words, just 37 of the 435 races are considered truly competitive. Those are the races that will determine the majority.

Given the overall political dynamics, including the president's low approval ratings, high gas prices, and polling showing Americans' frustrations with the state of the economy, the environment is favorable for Democrats. We continue to see Democrats as favorites to emerge with a House majority of perhaps six to 10 seats after November's voting.

Senate: The Senate presents a much more complicated map for Democrats, who need to flip four seats to capture the majority. It's a tricky path at best. Democrats would need to first retain seats they currently hold in three competitive races: Georgia, Michigan, and New Hampshire. That's far from a certainty.

Democrats' best chance to flip a Republican-held seat is North Carolina, where Senator Thom Tillis (R) is retiring and former Governor Roy Cooper (D) has been consistently ahead in the polls. Democrats will also likely need to flip Maine, where Senator Susan Collins (R) is seeking her sixth term and Democrats had to make a late candidate swap in late July after their nominee dropped out of the race. From there, Democrats are eyeing seats in four red states—Alaska, Iowa, Ohio, and Texas—as possible wins. Netting four seats is not impossible in an overall atmosphere that favors Democrats, but it's not likely. While it is plausible to draw paths to Democrats winning the Senate majority, we continue to think Republicans are favored to hold on by a seat or two.

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