Warsh’s FOMC Debut Puts Fed Rate Path in Focus

Trump Presses for Cuts as Inflation Surges

Calls Grow Inside the Fed for Higher Rates

Decision Could Also Shape Bitcoin’s Next Move

Kevin Warsh, the new chair of the Federal Reserve, will preside over his first regular Federal Open Market Committee meeting next week after taking office. Global financial markets are watching closely to see how he balances mounting inflation pressures against President Donald Trump’s calls for lower interest rates.

The Fed will hold its June FOMC meeting over two days beginning June 16 to set the benchmark rate. Markets are increasingly betting officials will leave rates unchanged after energy prices jumped in the wake of the US attack on Iran, pushing inflation to its highest level in three years.

The decision could also prove pivotal for crypto markets, including Bitcoin, which has recently rebounded. On June 5, Bitcoin fell below $60,000 for the first time in about 20 months since October 2024, fueling concern about deeper losses. It later recouped those declines and traded back in the $64,000 range as of June 14. With a US-Iran agreement appearing close, any signal from this FOMC meeting in favor of the market’s expected rate cuts could add momentum to gains in risk assets.

Warsh, however, faces an increasingly difficult backdrop. Picked by Trump, he had previously supported lower rates. But recent economic data has strengthened the hand of hawkish officials. With the labor market still strong and inflation continuing to rise, four policymakers pushed back against a rate-cutting stance and argued for holding rates steady at the April meeting, the largest number since 1992.

Attention has now shifted to whether the Fed will alter its forward guidance on the prospects for future rate increases or cuts. CME FedWatch data shows markets had initially expected rate cuts by the end of this year. More recently, traders have even begun to price in the possibility of a rate increase in December.

Another key focus is Warsh’s push to overhaul the Fed’s communications strategy. He has criticized the central bank for communicating with markets too often, arguing that the approach has aggravated policy mistakes and increased volatility. Because he has called for abolishing the dot plot and scaling back forward guidance, his debut meeting is likely to feature a more restrained message.

Diane Swonk, chief economist at KPMG, said delaying a rate increase is now more dangerous than it was when the economy was emerging from the pandemic. She added that it remains to be seen whether Warsh will yield to pressure from Trump.