Federal Reserve chairman Kevin Warsh announced he would not raise interest rates at Wednesday’s June FOMC meeting, but Kalshi traders think a hike is still very much in play sometime in 2026.
The market for the next Fed rate hike shows a price of 54% that it will happen before 2027, 72% before July of 2027, and 79% before 2028.
No change for now
Warsh, who was confirmed as the new Federal Reserve chairman in May, held his first meeting on Wednesday.
CNBC reported that the Federal Open Market Committee "voted unanimously to keep its benchmark overnight borrowing rate anchored in a range of 3.5%-3.75%. The federal funds rate has held there since the central bank lowered rates by three-quarters of a percentage point in the later part of 2025."
Traders are looking closely at how the committee reacted with its new chairman at the helm. The New York Times reported, "Mr. Warsh's new colleagues have not only rejected the idea that rates can fall anytime soon, but many have also embraced the possibility of having to raise them to bring inflation back to 2 percent – a target they have missed for five years. New projections released alongside Wednesday's rate decision underscored this shift.”
No forecast
Warsh delivered his message without providing a rate forecast, leaving traders with fewer clues about the Fed's future direction.
The median projection now sits at 3.8% by the end of 2026, which is up from 3.4% in the Fed's summary released back in March.
PBS News also reported that nine of the 18 officials projected the rate would end above its current rate by the end of the year, but Warsh was not one of those nine members. Warsh said he refrained from submitting a forecast because "It's not helpful in the conduct of policy."
The decision puts Warsh in a difficult situation. He faces the ire of the White House if interest rates increase, one of the key reasons President Donald Trump sought to replace former Fed Chairman Jerome Powell. Rate hikes are used to slow borrowing by increasing the cost of things like mortgages and auto loans, but higher rates could make things difficult for Republicans at the voting booth during the midterms.
A shorter statement
Just because the federal interest rate remains unchanged doesn't mean that Warsh and the committee refrained from making any new changes.
CNBC also reported that Warsh pared down his statement for his first press conference from 300 words to around 130 words. Warsh said he wanted his statement to be "a bit shorter, a bit simpler and it dispenses with some older language. That statement just gives you the facts, as best we can judge it."
More changes are expected to come from the new Fed chairman's leadership and how it communicates with the public. Warsh has been a vocal critic of the Fed's ability to communicate, "arguing that it leads to policy errors and entangles the central bank in markets."
The takeaway:
Kalshi markets now predict:
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