- Markets expect the Fed to keep rates unchanged, but focus is on Kevin Warsh’s first FOMC.
- Bernanke came closest to the Fed’s 2% inflation target, while Powell posted the highest average rate.
- Crypto, equities, gold, and currency traders are watching the Fed’s liquidity outlook.
Kevin Warsh’s first Federal Open Market Committee meeting concludes on June 17, and investors are treating it as more than a routine rate decision.
The Federal Reserve is widely expected to keep rates unchanged at 3.5%-3.75%, but markets are focused on what Warsh says, how he communicates, and whether the Fed is leaning toward higher rates later this year.
Crypto markets, stocks, gold, currencies, and commodities will all react to where liquidity goes next.
Rates Likely Stay Put, But Markets See Hike Risks
The Fed is expected to leave interest rates unchanged for a fourth straight meeting. Meanwhile, inflation remains above the Fed’s 2% target, the labor market remains solid, and several policymakers have become more hawkish.
The June meeting will include updated economic projections and the closely watched dot plot. In March, Fed officials projected one rate cut in 2026. However, several officials are expected to reduce their expectations for cuts, while some could pencil in a rate hike due to higher inflation forecasts.
Warsh has long criticized forward guidance. Analysts expect the policy statement to remove language that pointed to additional easing.
Such a move would align with his preference for giving markets fewer signals and would also reflect the possibility that rates may need to remain high for longer periods.
Inflation Remains Above Target
Data show that average inflation under Jerome Powell reached 3.09%, the highest among recent Fed chairs. Alan Greenspan averaged 2.5%, Ben Bernanke averaged 1.84%, and Janet Yellen averaged 1.17%. The Bernanke years came closest to the Fed’s 2% inflation target.
Policy interest rates also varied significantly across recent Fed chairs. Average rates stood at 4.8% under Greenspan, 1.5% under Bernanke, 0.5% under Yellen, and 2.6% under Powell.
The conflict with Iran pushed energy prices higher earlier this year, adding to inflation concerns. However, a ceasefire and the return of shipping through the Strait of Hormuz have helped crude prices retreat. Brent crude recently fell to around $83 a barrel.
Markets Are Watching Liquidity
Bitget CEO Gracy Chen described this week’s FOMC meeting as one of the biggest macro events on the calendar. She said Bitcoin no longer trades only on crypto-specific developments. Stocks, gold, currencies, and commodities are now reacting to the same liquidity cycle.
If Warsh delivers a hawkish message, the dollar could remain strong and pressure risk assets, including equities and cryptocurrencies.
A more dovish tone could trigger a relief rally. However, investors would still question whether an easier policy is justified while inflation remains above target.
Related: Will Kevin Warsh’s Words Impact Market Volatility Like Powell’s First Day as Fed Chair?
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