Warsh's Rate Hike Gamble: Will New Fed Chair Shock Markets in July?

New Fed Chair Kevin Warsh has been intentionally tight-lipped about his views on interest rates. However, he may have the necessary votes to move forward with a rate hike at the July meeting of the Federal Open Market Committee (FOMC).

The FOMC's July meeting will conclude on Wednesday, July 29, with a decision on interest rates and a press conference with Warsh. This is only his second meeting as chair, but he has already made significant changes to the Fed's approach.

Warsh has reduced forward guidance, which has put some of the market on edge. The lack of clear direction from the Fed has led to speculation about a possible rate hike. According to CME Group's FedWatch tool, there is a 68.5% chance that rates will remain unchanged, while a 31.5% chance sees a quarter-point hike.

Some FOMC members appear to favor a rate hike at the July meeting. Lorie Logan, president of the Federal Reserve Bank of Dallas, has publicly stated that she thinks a rate hike would be prudent. Cleveland Fed President Beth Hammack also believes inflation is too high.