Kevin Warsh to Take Office as Fed Chair This Week; Markets See Low Odds of Early Rate Cuts

Kevin Warsh is set to formally take office as chair of the Federal Reserve this week, with markets assigning low odds to an early interest-rate cut.

Cointelegraph reported on May 18 that the U.S. Senate approved Warsh's nomination as Fed chair a day earlier in a vote that largely followed party lines. Warsh is scheduled to officially succeed Jerome Powell on May 20.

President Donald Trump had until recently continued to pressure Powell to lower rates. He repeatedly argued that Powell should cut interest rates and in April said he would be disappointed if Warsh did not move to reduce rates immediately after taking office.

Even so, markets are increasingly betting that the Fed will keep rates unchanged for the time being under Warsh.

On prediction market platform Kalshi, the probability of a Fed rate cut before 2027 is currently priced at 38.2%, down sharply from about 96% in February.

By contrast, CME FedWatch shows a 98.8% chance that the Fed will keep its benchmark rate at 3.50% to 3.75% through the end of June. The probability of no change through July also stands above 94%.

Recent inflation pressures and rising Treasury yields are also curbing expectations for Fed policy easing.

Jeffrey Gundlach, chief executive officer of DoubleLine Capital, said in a recent appearance on Fox News' "Sunday Morning Futures" that investors had expected two rate cuts this year, but inflation has not cooperated. With the two-year Treasury yield trading nearly 50 basis points above the policy rate, a rate cut would be impossible, he added.

Warsh's first Federal Open Market Committee meeting as chair is scheduled for June 16.