Warsh's First Big Test: Will He Deliver a Rate Cut or Hike?
Kevin Warsh, appointed as Federal Reserve Chair by President Trump, has maintained a steady federal funds rate since taking office in May 2026. Despite Trump's demand for rate cuts before Warsh's appointment, market expectations have flipped from anticipating a cut to a hike. The CME FedWatch Tool data shows a 67.4% chance of a 25bps hike at the September 16 meeting, compared to 32.6% for no change.
Hot inflation data released recently has added pressure on Warsh's decision, with the August Producer Price Index (PPI) rising 5.4% year-over-year, above July's 4.7%. Trump's trade threat, which could cut off trade with nearly half of US trading partners, has also contributed to the market's shift in expectations.
The crypto market reacted negatively to the inflation data, with the global cryptocurrency market cap down 0.7% over the last 24 hours and $100 billion in trading volume. The outcome of Warsh's decision will have significant implications for both the US economy and the crypto market.