Fed's First Warsh-Era Rate Decision Comes This Week — and a Hike Is on the Table

Here's the situation in plain English: the Fed is meeting June 16–17 for the first time under its new chairman, Kevin Warsh — and despite what many people expected just a few months ago, the question is no longer whether the Fed will cut rates. Now people are asking whether it might actually hike them.

Warsh took over from Jerome Powell on May 22, becoming the 17th chair of the Federal Reserve. He was Trump's pick, and Trump made no secret of wanting lower rates. But here's the twist: the economy isn't cooperating with that wish.

Inflation just came in hot — the Consumer Price Index rose 4.2% year over year in May, the highest reading since April 2023. A big chunk of that is being driven by energy prices. Crude oil is back above $100 a barrel, tied to the ongoing U.S.-Iran conflict, and diesel is sitting at $5.66 a gallon. That matters to you directly: higher diesel means higher prices on basically everything that gets trucked to a store shelf. Flights are up 24% on average too.

So where does that leave us heading into the meeting? Futures traders tracked by CME's FedWatch tool — essentially the market's collective bet on what the Fed will do — have completely abandoned expectations for a rate cut this year. A few months ago, markets were pricing in cuts. Now? Cuts are at zero probability, and the odds of a rate hike before year-end have climbed meaningfully. A majority of traders now expect at least a quarter-point hike by October, and there's a roughly 23.5% chance of rates being a half-point higher by December.

For this specific June meeting, almost everyone expects the Fed to hold rates steady at the current 3.50–3.75% range. But that's almost beside the point. What Wall Street and Main Street are really watching is what Warsh says — his tone, his press conference, and whether the Fed's new economic projections (called the 'dot plot,' which maps out where policymakers expect rates to go) signal a shift toward tightening.

There's a wrinkle worth knowing: Warsh has been notably silent since taking the job. He's actually criticized the Fed's habit of over-communicating, and that silence going into his first big meeting has left markets genuinely uncertain about what comes next. J.P. Morgan says the Fed will likely hold for the rest of 2026 but expects an explicit signal that the bias toward cuts is gone.

And there's the political wildcard. Trump wants lower rates, has publicly said so repeatedly, and even warned earlier this year that he wouldn't have picked Warsh if Warsh planned to raise rates — though he recently softened that to 'do whatever he wants.' Former chair Powell, meanwhile, is sticking around on the Board of Governors and will continue voting on rate decisions through early 2028, which adds another layer of complexity.

Bottom line for you: don't hold your breath for relief on borrowing costs. Mortgage rates are hovering around 6.4% for a 30-year fixed loan, and the path looks more sideways — or even higher — than downward. If you have short-term savings, a high-yield savings account is still your friend. If you're carrying variable-rate debt, now's the time to pay attention.