Kevin Warsh sworn in as Fed chair, as traders forecast rate hikes in 2026

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Warsh, pictured on the left, is sworn into office 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, drawing mixed reactions from investors and economists, who weighed the likelihood of the Federal Reserve continuing to expand the monetary supply through low interest rates. Lower interest rates are stimulative for risk-on assets like Bitcoin and crypto; however, cheap access to credit can also cause inflationary spikes, as individuals and institutions are encouraged to borrow cheaply and spend money on investments and commercial goods. Related: Senate confirms Kevin Warsh to lead Federal Reserve Investors forecast no chance of an interest rate cut in 2026, and potential rate hikes at the remaining Federal Open Market Committee (FOMC) meetings, according to the Chicago Mercantile Exchange’s (CME) FedWatch tool. 3.5% of investors forecast a 25 basis point (BPS) interest rate hike at the next FOMC meeting, scheduled for June 17, according to CME data. For context, the current Federal Funds Target rate is between 350 and 375 BPS. Interest rate target probabilities for the June FOMC meeting. Source: CME Group The probability of a 25 BPS rate hike at the July FOMC meeting surged to 17%, and about 67% of investors forecast a rate hike at the FOMC’s final meeting in December. The lack of interest rate cuts and macroeconomic uncertainty regarding the change at the Federal Reserve could negatively impact risk assets like Bitcoin, crypto and equities over the next several months. Magazine: Will the CLARITY Act be good — or bad — for DeFi? More on the subject

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