Kevin Warsh will be sworn in as the next chair of the US Federal Reserve, stepping into a role critical for shaping the country’s monetary policy. Despite President Donald Trump’s repeated calls for rate reductions, data from market platforms indicates a strong consensus that the Fed will keep interest rates steady, at least through the first half of this year.
The US Senate confirmed Warsh largely along party lines, positioning him to succeed Jerome Powell. Trump had publicly expressed dissatisfaction with Powell’s approach, urging faster interest rate cuts. Ahead of his confirmation, Trump said he would be disappointed if Warsh did not immediately lower rates upon taking office. Nevertheless, current market indicators suggest otherwise.
Prediction markets show a sharp decline in the probability of rate cuts before 2027, down from near certainty just months ago. For instance, Kalshi’s betting contracts now place less than a 40% chance on any Fed rate reduction happening before 2027. The CME FedWatch tool assigns almost a 99% chance that the benchmark federal funds rate will remain between 3.50% and 3.75% through June, with a similarly high likelihood of no change extending into July.
Warsh’s influence will be pivotal at Federal Open Market Committee meetings, with the next opportunity to alter rates scheduled for mid-June. Market participants will be closely watching if Warsh’s leadership shifts the Fed’s course from Powell’s tenure amid ongoing economic uncertainties.
His confirmation raised eyebrows among some lawmakers, notably Senator Elizabeth Warren, who warned at the Senate Banking Committee hearing that Warsh’s appointment could bring conflicts of interest, citing Warsh’s significant personal investments—over $100 million—including stakes in artificial intelligence and cryptocurrency firms. Concerns were voiced about potential favoritism toward businesses connected to the Trump administration or Wall Street allies in financial distress.
Meanwhile, attention also focuses on regulatory developments involving the Commodity Futures Trading Commission (CFTC), the federal agency overseeing derivatives and cryptocurrency markets. Since December, the CFTC has been led solely by Michael Selig, a Trump appointee, with the agency taking a firm stance on claiming authority over prediction market platforms like Kalshi.
Leaders from the House Committee on Agriculture, representing both major parties, have urged the president to fill out the full slate of CFTC commissioners. They emphasized the importance of having a complete panel to address pressing regulatory challenges, especially if legislation such as the Digital Asset Market Clarity Act (CLARITY) advances. This bill aims to define clearer market structures for digital assets, an area of growing importance amid the federal government's increasing involvement in cryptocurrency regulation.