Kevin Warsh, sworn in as Federal Reserve chairman Friday, is likely to cut interest rates despite the prevailing market consensus expecting hikes, according to author and analyst Lawrence Lepard.
Lepard points to comments from White House officials Kevin Hassett and Treasury Secretary Scott Bessent as supporting the case for rate cuts in 2026. He argues Warsh will cite AI productivity and transitory inflation to justify easier policy.
President Donald Trump, speaking at the swearing-in ceremony, signaled the administration intends to tackle national debt through growth, implying monetary expansion and lower rates.
Market data from the CME FedWatch tool shows nearly 68% of traders expect a rate hike of at least 25 basis points by December 2026. Trump's comment that "we want to stop inflation, but we don't want to stop greatness" drew skepticism.
Senator Elizabeth Warren has raised concerns over potential conflicts of interest, noting the Trump family's crypto businesses could benefit from Warsh's policies.
Bitcoin, crypto, and stock investors may face months of price declines amid uncertainty over the Fed's direction.