Fed rate cuts unlikely as Kevin Warsh confirmed, rates set to stay near 3.5%-3.75%
The US Senate confirmed Kevin Warsh as the next Federal Reserve chair, with him set to be sworn in on Friday after succeeding Jerome Powell. The political backdrop is tense: Trump has repeatedly urged lower rates, and Warsh’s confirmation has revived concerns about Fed independence.
Markets are currently pricing limited near-term “Fed rate cuts.” Kalshi places the probability that the Fed will lower interest rates before 2027 at 38.2%, down sharply from 96% in February. Meanwhile, CME FedWatch shows a 98.8% probability of no change to the current 3.50%–3.75% policy rate through the end of June, with more than a 94% chance the rate will remain unchanged through July. The next FOMC meeting is scheduled for June 16.
At Warsh’s Senate Banking Committee hearing, Sen. Elizabeth Warren warned that his leadership could create conflicts, including concerns about special treatment tied to Trump’s business interests. Warsh disclosed assets exceeding $100 million, including investments in AI and crypto-related companies.
Separately, lawmakers are still pushing Trump to nominate commissioners for the CFTC, amid regulatory focus on prediction markets platforms such as Kalshi and Polymarket. This matters for trading venues and derivatives market infrastructure, even as the immediate macro signal remains the lack of near-term Fed rate cuts.
Bearish
The confirmation of Kevin Warsh comes with a macro setup that is not aligned with aggressive easing expectations. With CME FedWatch and Kalshi both implying that near-term Fed rate cuts are unlikely (rates likely stay around 3.5%–3.75% into June/July), US yields and the dollar can remain better supported. In past episodes when rate-cut expectations were pushed out, risk assets (including crypto) often saw pressure as liquidity expectations weakened and discount rates rose.
For traders, the short-term effect is likely risk-off or choppy downside bias rather than a clean rally, because many crypto rallies are liquidity-driven. The June 16 FOMC meeting is the next catalyst: if data reinforce “higher-for-longer,” it can extend bearish positioning. Longer term, if political scrutiny harms Fed credibility, markets could become more volatile; volatility can occasionally create short-lived spikes in BTC/ETH, but without confirmation of easing, follow-through tends to be limited.
Overall, this is a policy-expectations shock leaning toward fewer/later Fed rate cuts—typically a headwind for crypto valuations until the path to easier policy becomes clearer.