Markets await Warsh’s first meeting as Fed chair

Federal Reserve Chair Kevin Warsh will lead his first policy meeting next week as investors increasingly question whether interest rates could rise again if inflation remains stubbornly high.

The Fed is widely expected to leave rates unchanged, but markets will be closely watching Warsh’s first press conference as chair for signals about the central bank’s next move and any changes to how he communicates policy.

Warsh, who was confirmed last month as chairman of the Federal Reserve, succeeds outgoing chairman Jerome Powell, who faced repeated pressure from President Donald Trump to cut interest rates.

“I think, more important than the fact that everyone expects the Fed to do nothing, will be how Warsh presents himself at the press conference,” Melissa Cohn, regional vice president president at William Raveis Mortgage, said in an interview with HousingWire.

“Is he going to take a more hawkish stance because of the higher rate of inflation? Is he going to continue with Powell‘s press conference after every meeting? Because that’s something that didn’t always happen.”

The Fed has already confirmed on its calendar that Warsh will hold a press conference on June 17. But he did not say in his Senate testimony whether he would commit to holding them after every meeting as Powell did, or go back to holding meetings four times a year, which was the pre-Powell practice.

“I think that we have to remember a couple of things: Warsh is just one of 12 voting members, and there certainly are not six other members that would vote with him for a rate cut, nor would it be prudent to do so in today’s current economic condition,” Cohn said. “Warsh is supposedly more dovish than Powell, but I think realistically there is no way he could advocate for a rate cut.”

The latest Consumer Price Index report from the U.S. Bureau of Labor Statistics (BLS), which showed inflation at 4.2% annually — well above the Fed’s 2% target — was driven in part by higher energy prices following the conflict involving Iran.

The report has raised concerns that inflation could remain above the Fed’s target for longer than expected.

“Once the war does get resolved and oil prices do start to go back down to where they were pre-war, that’ll put Warsh in a different boat,” Cohn said. “Warsh did make a comment on his thoughts that AI will be disinflationary and give the Fed room to cut — and that may prove out at some point in the future, but it’s certainly not the case today.”

Josh Rubin, a real estate agent at Douglas Elliman, agrees that the Fed will likely leave rates unchanged even though the European Central Bank (ECB) recently raised rates by a quarter point from 2% to 2.25%, citing inflation concerns tied to energy.

“While the Federal Reserve often moves in tandem with the ECB, this will be one of the first meetings led by newly appointed Chairman Kevin Warsh. While some colleagues may feel a quarter-point move is warranted, patience will be the theme at the upcoming meeting,” Rubin said.

“This is Kevin Warsh’s first meeting as Chair, so markets will read the tone as much as the decision,” said Isaac Boltansky, Pennymac‘s head of public policy. “A successful debut for Chair Warsh, and by extension for markets, would be a meeting where the FOMC speaks with one voice: no public split and no confusion about where policy is headed.

“We are also watching whether he discusses the Fed’s balance sheet or how the FOMC communicates policy going forward. Those are longer-term issues, but they matter to markets.”