Warsh's Fed Debut: Dot Plot Drops Its Last 2026 Cut, Hike Odds Spike to 66% 🪙

The Federal Reserve held its benchmark federal funds rate steady at 3.50% to 3.75% on June 17, the fourth consecutive meeting officials have chosen to keep policy unchanged, in the first rate decision under new Chair Kevin Warsh. The move had been priced in at roughly 97% probability on the CME FedWatch tool before the announcement, and the FOMC statement framed economic activity as "expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East." The statement also removed prior language suggesting a bias toward future rate cuts and added the blunt line: "The Committee will deliver price stability."

The June Summary of Economic Projections marked a sharper turn. The dot plot, which had still contained at least one projected 2026 cut in every prior edition this year, dropped that final cut entirely. Raymond James had projected at least three voting members would show a hike before December, and the final print confirmed the shift. A Reuters poll of 102 economists found 72 expecting rates unchanged through the end of 2026, while consumer inflation was forecast at 4.2% year-over-year last month and the Fed's preferred Personal Consumption Expenditures Price Index sat at 3.8% in April. Following the meeting and Warsh's press conference, futures traders priced a 66% probability of at least one rate hike before year-end, one of the sharpest pricing reversals of 2026, while the 10-year Treasury yield hovered near 4.47% and the 30-year approached 4.97%.

Warsh's communication style drew as much attention as the rate path. The new chair, confirmed by the Senate last month after the Department of Justice dropped its criminal investigation into predecessor Jerome Powell, has long criticized the Fed's reliance on forward guidance and quarterly projections, telling a State Street conference last year, according to the Wall Street Journal, "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." Goldman Sachs and Bank of America economists had said there was a chance Warsh would decline to submit his own projections to the SEP, a move that would have made him the first Fed chair in 14 years to skip the dot plot. Bank of America also projected policymakers would acknowledge rising inflation risks and signal a lower willingness to look through price shocks than in recent years, with modest cuts not returning until 2027 and 2028.

Crypto markets reacted to the hawkish turn. Bitcoin changed hands around $65,300, dipping just over 1% on the day but still up roughly 5% over the past week, according to market data. Ethereum traded near $1,763, up 7.6% over seven days, and Solana sat around $73, up 13% on the week. Higher-for-longer borrowing costs remain a headwind for risk assets, and analysts noted that the European Central Bank moving in parallel toward tightening adds another layer of pressure on global liquidity conditions that Bitcoin and the broader market track closely.

Warsh's first meeting delivered one clear signal: with inflation still running above the 2% target, labor data surprising to the upside, and the dot plot's last 2026 cut now gone, the era of cheap money priced in for this year has effectively run out of road.