- On June 17, an FOMC meeting on the interest rate will take place.
- It will be the first for Kevin Warsh as Fed chair.
- The market is pricing in an almost 100% probability that the rate will be kept at its current level.
- Warsh finds himself in difficult conditions — between high inflation and Trump, who is against tightening policy.
On June 17, 2026, a meeting of the US Federal Open Market Committee (FOMC) will take place, following which a decision on the interest rate will be made. According to the forecast of the CME exchange, the regulator will hold its course with a probability of 99.6%.
At the same time, let us note that this is the Committee's first meeting under the new chair — Kevin Warsh. His candidacy was nominated and supported by US President Donald Trump, who has repeatedly emphasized that he demands the regulator ease its course.
In this connection, Warsh faces a dilemma. The acceleration of inflation in May 2026, the consequences of tariffs and still-high energy prices call for keeping the course or even tightening monetary policy, whereas the head of state insists on cutting the rate to support economic growth.
Who is Kevin Warsh and what is his approach?
We examined him in detail in a separate article. Let us note that Warsh holds a pro-presidential position regarding the Fed. In his view, the regulator should chart its course with an eye to the head of state.
Trump's choice: everything you need to know about Kevin Warsh — the new Fed chair 03.02.2026 Read
Before his candidacy was confirmed by the Senate, Warsh stated at the hearings that the Fed would preserve its independence. He confirmed this in an internal memorandum from early June, Reuters reports.
At the same time, in his opening remarks the new Fed chair emphasized that he is «ready for discussions» and »a change of course if better alternatives are found»:
«Our highest priority will be developing the right policy that meets our objectives and the national interest. We will provide conditions that allow our staff to fully realize their potential. We will not rely on past methods if we find better alternatives. In the coming quarters, I expect that together we will hold open and objective discussions about the Fed's strategies, policies and operations».
His first steps as chair envisage, according to the publication, the following: reducing the Fed's balance sheet from the current level of $6.7 trillion, lowering the level of discussion about interest rates, and considering the use of alternative inflation indicators to assess the situation and make decisions.
Difficult conditions
The first Fed meeting under Warsh will take place under unusual circumstances. The first is that inflation accelerated in May 2026 to 4.2%. At the same time, the increase in the core consumer price index (CPI), which excludes energy and food prices, turned out to be lower than in April.
The jump in CPI raises concerns that inflation will continue to rise, but the Fed cannot influence the oil market, and other indicators are stable.
The second is that the regulator awaits a Supreme Court ruling in the case of Lisa Cook, which is viewed as Trump's attempt to forcibly remove an employee of an independent agency. This was stated by former Fed chair Jerome Powell, who emphasized the threat of such a precedent emerging.
The new administration removed Cook in August 2025, accusing her of mortgage-lending fraud. She turned to the courts, and the proceedings are still ongoing.
The third is that Powell has kept his seat on the Fed's Board of Governors. According to him, he will not retire until the perjury case against him is fully closed. The Justice Department wound down the investigation in April 2026, transferring it to the Fed's jurisdiction.
He may form an opposition to Warsh, which in the long run will complicate the adoption of, for example, a contentious decision.
Trump pressures the new Fed chief
Even at the candidate-selection stage, the president stated outright that the new Fed chief would substantially cut interest rates. Powell followed a different course, for which the head of state repeatedly criticized him.
In an interview with Kristen Welker for the Meet the Press program in early June 2026, Trump said the following:
«I think Kevin is terrific, and I want him to act at his own discretion. I don't want to exert much influence on him. But we had an excellent report. Everything is going great for us, and it's unfair that every time you're doing well, they want to raise interest rates. It should be the other way around».
According to the president, in the past, when «good reports» were published the market rose, but now it falls, because investors expect the Fed to tighten policy.
Let us note that raising the interest rate often leads to an outflow of capital from high-risk positions into hedge ones, for example, US Treasury bonds. A smaller volume of available liquidity and credit holds back economic growth, which is precisely what Trump pointed out.
For more on how the Fed rate affects the crypto market, see a separate video on our YouTube channel.
«In fact, we should cut interest rates. Of course, if inflation comes, people live with inflation, but if inflation does come, we'll suppress it. But success can kill inflation just as well as raising interest rates can», Trump stated.
When the host asked how Trump would react to a rate hike at the June 17, 2026 meeting, the president answered the following:
«I respect him very much, but it seems to me that when a country is prospering, it should not be punished with an immediate rise in interest rates. On the contrary, it should be stimulated. You know, we have debt, we have other problems. We have things we want to solve. I want to increase military spending. I really think so. If we do as I say, it will be a wonderful, well-tuned mechanism, the likes of which you have never seen before».
Let us note that while the probability of an easing of the course, according to the CME forecast, is 0%, the chance of a rate hike is 0.4%.
Experts' opinions
Most experts hold the view that the Fed will keep the interest rate unchanged. At the same time, as entrepreneur Ajay Banga emphasized, the main question lies not in the regulator's decision but in the «tone» of Warsh's address.
MacroMicro experts noted that this meeting could lead to a repricing of three key risks:
- a shift in the «dot plot» toward abandoning rate cuts. This concerns, in particular, the possibility of the regulator keeping its course until the end of 2026;
- a halt to reserve management operations (RMP)/purchases of Treasury bills;
- a reduction in the volume of forward guidance. If Warsh provides fewer policy signals, markets may lose a key support, which will lead to increased volatility.
At the same time, Wharton School professor of practice Mohamed El-Erian noted that the Fed's tone may be less «hawkish» given the progress in negotiations between the US and Iran. Trump announced a deal between the parties earlier this week, which had a positive effect on the markets.
KPMG US chief economist Diane Swonk believes that Warsh is unlikely to «show his cards» at the first meeting. At the same time, in her words, the indicators are pushing the Fed toward tightening policy. She expects that the regulator may be forced to raise rates to combat inflation.
What's the bottom line?
Warsh took the helm of the Fed under difficult conditions. Inflation is rising amid a jump in energy prices. The de-escalation of the conflict with Iran stabilized prices, but this may be temporary.
Experts believe that under the current conditions the regulator will adopt a neutral stance or even raise the rate. Warsh is Trump's appointee, and the president is sharply opposed to this.
Further forecasts depend on the new Fed chair's first press conference. If it is «hawkish», it will lead to a repricing of the future course and a drop in the markets; if it is «dovish», the opposite.
Experts also voiced concern about Warsh's plans to reduce the number of «discussions» of indicators and the interest rate. This could lead to increased volatility in the near term.
Source: Incrypted
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