Kevin Warsh was sworn in as chairman of the US Federal Reserve on Friday, but investors and traders still expect no interest rate cuts for the remainder of 2026.
Speaking at the ceremony, US President Donald Trump said Warsh would remain “independent” of the executive branch regarding interest rate policyand claimed that employment figures are at record levels.
“Fortunately, unlike some of his predecessors, Kevin understands that when the economy is booming, it’s a good thing,” Trump said. said. He added:
“We have some debt that we’d like to take care of, and the way to do that is through growth. We’re going to get out of this so quickly.”
Warsh, pictured left, is sworn in by Supreme Court Justice Clarence Thomas. Source: The White House
“We want to stop inflation, but we don’t want to stop greatness,” Trump continued, with mixed sentiment. reactions ” from investors and economists, who have weighed the likelihood that the Federal Reserve will continue to increase the money supply through low interest rates.
Falling interest rates boost risk assets like Bitcoin and crypto; However, cheap access to credit can also cause inflationary surges, as individuals and institutions are encouraged to borrow cheaply and spend money on investments and commercial goods.
Related: Senate confirms Kevin Warsh as head of the Federal Reserve
Investors predict 0% chance of interest rate cut in 2026
Investor forecasts no chance of interest rates falling in 2026, and possible rate hikes at the remaining Federal Open Market Committee (FOMC) meetings, according to the Chicago Mercantile Exchange (CME) FedWatch tool.
3.5% of investors expect an interest rate hike of 25 basis points (BPS) at the next FOMC meeting, scheduled for June 17, according to CME data. As a reminder, the current target federal funds rate is between 350 and 375 BPS.
Interest rate target probabilities for June FOMC meeting. Source: CME Group
The probability of a 25 BPS rate hike at the July FOMC meeting has increased to 17%, and about 67% of investors expect a rate hike at the final FOMC meeting in December.
The lack of interest rate cuts and macroeconomic uncertainty regarding the change at the Federal Reserve could have a negative impact on risky assets like Bitcoin, crypto and stocks over the next few months.
