Kevin Warsh to Be Sworn In as Fed Chair; Markets Price In June Rate Hold
Summary
- Markets see limited scope for a near-term rate cut even after Kevin Warsh takes office as Fed chair.
- According to CME FedWatch, markets are pricing in a 96.8%% chance of a benchmark rate hold at the June FOMC meeting and a 3.2%% chance of a 25-basis-point rate increase.
- Market participants say Middle East risks, rising oil prices, the possibility of renewed inflation pressure and Warsh’s hawkish stance are constraining expectations for early Fed easing.
Forecast Trend Report by Period
Kevin Warsh, President Donald Trump’s nominee to lead the Federal Reserve, will be formally sworn in as Fed chair on May 22. Even after the leadership change, markets see little chance of a near-term interest-rate cut.
BlockBeats reported on May 22 that the White House said Warsh’s swearing-in ceremony was scheduled for 11 a.m. Trump will preside over the event.
Investors are also watching how monetary policy may develop under Warsh. CME FedWatch data show markets are pricing in a 96.8% chance that the Federal Open Market Committee will leave its benchmark rate unchanged at its June meeting.
The probability of a 25-basis-point rate increase stands at 3.2%, while the chances of a rate cut are effectively not being priced in.
Market participants cite Middle East risks, rising oil prices and the possibility of renewed inflation pressure as factors limiting expectations for early Fed easing. Warsh is also regarded as relatively hawkish, fueling discussion of a possible shift in the Fed’s policy stance.
