Polo Rocha
June 24, 2026
KEY TAKEAWAYS
- New Federal Reserve Chair Kevin Warsh refused to give any forward guidance in his first meeting on Wednesday.
- That left markets to interpret the Fed's inflation-fighting stance as a signal that rate cuts were ahead.
- Traders are pricing in an 83% probability that the Fed will hike its influential interest rate at least once this year.
Federal Reserve Chair Kevin Warsh is making one thing quite clear: the central bank will bring inflation back to 2%.
It may not happen right away, as energy disruptions caused by the war in Iran push prices higher, bringing inflation to 4%. Nor will markets get clear clues from the Fed along the way, as Warsh cuts back on “forward guidance” that gives a sense of the policy committee's next moves.
But after years of "persistently high prices" burdening U.S. households, Warsh said at his first press conference that “recent past need not be prologue” and promised to “deliver” on a return to the Fed’s 2% inflation target.
“I’ve said for years: Inflation is a choice. You bet it is,” Warsh told reporters. “And today, I'm announcing that this committee unambiguously and unanimously … decided we are going to deliver on that.”
U.S. Federal Reserve Chair Kevin Warsh speaks during his first press conference in Washington, DC, on June 17. Brendan SMIALOWSKI / AFP via Getty Images
It is a word he hammered home through repetition: “The commitment to deliver is strong, unanimous and unambiguous,” he told one reporter. “When we deliver on our price stability objectives, which we will,” he told another. And it made its way into the Fed’s far-slimmer statement: “The Committee will deliver price stability.”
Why This Matters
Warsh’s message suggests the Fed is prioritizing inflation control even if it means keeping borrowing costs higher for longer. That could affect mortgages, credit cards, investments, and expectations for future interest-rate moves.
Bond markets seem to have gotten the message, at least in their early read of the Warsh-led Fed. The 2-year U.S. Treasury yield, a proxy of markets’ views of Fed policy for the next two years, rose to 4.20% on Wednesday from 4.05% a day earlier as more investors saw a hike ahead.
“After today's meeting, we see a much higher risk that the Fed will hike this year,” wrote Aditya Bhave, U.S. economist at Bank of America, who still sees the Fed staying on hold.
Bond investors tend to worry that inflation will eat away at the fixed interest payments they get when they buy a bond. But Warsh’s first Fed meeting was “clearly hawkish,” Bhave wrote, given his emphasis on inflation and a shift among the Fed’s 18 other policymakers.
Ahead of the Fed meeting, there was lingering concern from some investors that Warsh "would bend to political pressure" and be sympathetic to President Donald Trump’s call for lower rates, according to Natalia Lojevsky, managing director at CIFC Asset Management. It was an issue that sparked Trump’s legal battle with Warsh’s predecessor Jerome Powell.
Instead, Warsh “came in swinging on the 2% target and used his first press conference to re-establish Fed credibility and independence,” Lojevsky said in emailed commentary.
Markets were “relatively calm, all things considered,” even as Warsh laid out a series of changes in the Fed’s policymaking style, wrote Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.
“If nothing else, the market has renewed confidence in the Fed’s inflation-fighting ability and conviction,” Lyngen said.
Warsh laid out a “new chapter” for the Fed, with broad reviews on the Fed’s communications, data analyses, financial footprint and inflation framework—though he made clear the 2% target isn’t changing. The goal is ensuring the Fed is “clear-eyed about its mission” to ensure maximum employment and stable prices, he said.
No Hikes… Yet?
For all the focus on tackling inflation, the Fed didn’t raise its benchmark interest rate from 3.5% to 3.75%. But rate hikes could be coming.
The 18 members of the FOMC who submitted projections—Warsh didn’t since he dislikes the Fed giving hints about its future policy—displayed a clear hawkish shift.
Gone are the rate cut projections from months ago. Instead, the median Fed official is now projecting one rate hike this year, and six of the Fed’s 19 members indicated they see two or more.
The Fed is “split down the middle,” with the other half of the Fed not favoring higher rates, wrote James Knightley, chief international economist at the Dutch bank ING. With the Iran peace deal now at hand—and energy disruptions set to unwind—Knightley said an “extended pause” in the Fed’s benchmark rate is the most likely outcome.
However, traders seem to think a hike is quite likely. They saw an 83% probability of a Fed hike by year-end after Warsh's press conference on Wednesday, according to the CME Group’s FedWatch tool, which uses futures market pricing to determine Fed probabilities.
Forward Guidance
Warsh wasn’t keen to share his views on the Fed’s path ahead. Warsh has long been a skeptic of “forward guidance,” the Fed’s practice to give markets clues about what it may do in the future. And he batted away reporters’ attempts to get breadcrumbs.
“I can't give you any forward guidance about what we're going to do next,” Warsh said. “The good news is we'll be meeting in six weeks.”
But even as Warsh declines to share his views, other Fed officials are likely to offer perspectives on the path ahead in upcoming public appearances, according to Preston Mui, senior economist at Employ America, an economic research and advocacy organization.
“If Warsh doesn’t deliver forward guidance, the rest of his committee will,” Mui wrote.
And Warsh’s inflation-fighting message nonetheless guided markets, according to analysts at Northern Trust Asset Management.
“While the Warsh Fed may be saying less, [his] repeated emphasis on delivering price stability reverberated throughout markets,” they wrote.
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