Summary
- Market participants expect the benchmark interest rate hold to continue through September next year.
- After Warsh emphasized monetary policy independence and price stability as the top priority, US Treasury yields rose.
- The gap between the Fed, which is prioritizing price stability, and the White House, which is demanding continued rate cuts, is set to become a key variable for financial markets.
Forecast Trend Report by Period
Markets are betting the Federal Reserve will keep its benchmark interest rate unchanged through at least September 2027. The view gained traction after Kevin Warsh, President Donald Trump’s nominee for Fed chair, stressed monetary-policy independence and struck a hawkish tone.
According to CME FedWatch data on April 24, traders expect the Fed to leave rates unchanged, with no cuts, through at least September next year.
That view strengthened after Warsh’s comments at his Senate confirmation hearing on April 21. He said monetary policy should be decided independently of political considerations, signaling he would not be influenced by the president or Congress.
Warsh also called price stability the Fed’s top responsibility. “Low inflation is a shield that protects the Federal Reserve from criticism,” he said, emphasizing the need to achieve policy goals and stay within the central bank’s mandate. US Treasury yields rose immediately after the remarks.
His stance contrasts sharply with the White House’s push for lower rates. Trump has recently said the US should always maintain the lowest interest rates in the world and has continued to press for rate cuts.
Markets are now focused on the direction of monetary policy after Warsh takes office. The gap between a Fed prioritizing price stability and a White House demanding continued rate cuts stands to be a key driver for financial markets.
Doohyun Hwang
cow5361@bloomingbit.ioKEEP CALM AND HODL🍀
