Warsh Dot No. 1: Fed Debut Gives Crypto 66% Chance of a Hike Hiccup 🥶

The U.S. Federal Reserve held its benchmark federal funds rate at 3.50% to 3.75% on June 17, the first policy decision under Chair Kevin Warsh, with markets pricing a 66% probability of at least one rate hike before year-end after the Fed's Summary of Economic Projections removed its last remaining 2026 rate cut projection. The rate hold itself carried a 97% probability on the CME FedWatch tool before the meeting opened, so the decision was widely expected. The June edition of the dot plot, produced without Warsh's participation, eliminated the final 2026 cut projection that had appeared on every prior meeting's map this year. Treasury yields already reflect the shift, with the 10-year benchmark near 4.47% and the 30-year approaching 4.97%.

Analysts at Raymond James had anticipated at least three voting members would project a hike before December, and the final dot plot confirmed that shift in expectations. A Reuters poll of 102 economists found that 72 expect the Fed to keep rates unchanged through the end of 2026, while polled economists project consumer inflation at 4.2% year-over-year last month, with the Fed's preferred Personal Consumption Expenditures Price Index at 3.8% in April. Stronger-than-anticipated U.S. employment growth in May has further dimmed near-term easing expectations.

Warsh has long questioned the dot plot as a communication tool, and before taking the role signaled he wants a leaner Fed offering less forward guidance than markets grew accustomed to under Jerome Powell. He reiterated that view last year at a State Street conference, saying, "If you're not very good at something, you should do less of it. These forecasts have been abysmal. My dots wouldn't be perfect either, so I wouldn't give them." Bank of America and Goldman Sachs expected him to withhold his own dot, a move that would have made him the first Fed chair in 14 years not to participate in the SEP; the June dot plot was ultimately produced without his projection.

Bank of America expects this week's projections to show rates unchanged through 2026 before modest cuts in 2027 and 2028, with policymakers set to remove language suggesting a bias toward future rate cuts and to upgrade their labor market assessment after recent upside payroll surprises. In a Wall Street Journal profile published Sunday, Warsh advised the central bank to "Stop talking so much. More thinking, less talking," a philosophy expected to shape Wednesday's communication.

For risk assets, the prospect of a hike extending into late 2026 tightens global liquidity conditions that Bitcoin and the broader crypto market track closely, and the ECB moving in parallel toward tightening adds further pressure. At the start of 2026, investors had priced in one to two rate cuts by December, an assumption the June dot plot and Warsh's debut press conference have now removed from the table.