Warsh's First Fed Meeting Signals a Possible Rate Hike, Not a Cut

Kevin Warsh, in his first meeting as chair of the Federal Reserve, left the federal funds rate unchanged at 3.5 to 3.75 percent but delivered a clearly more restrictive message. The committee's median projection for the end of 2026 rose to 3.8 percent from 3.4 percent in March, nine of eighteen policymakers now expect at least one rate increase this year, and Warsh removed the forward guidance that had shaped communication under his predecessor.

Markets reacted in two stages. On the decision day the S&P 500 fell and the two-year Treasury yield rose about 16 basis points, then equities recovered the next session as attention turned to the Iran ceasefire and lower energy costs. As the Israeli financial daily Globes noted, the Nasdaq Composite rose nearly 2 percent in that rebound. United States markets were closed Friday for the Juneteenth holiday. Gold traded near $4,178 an ounce, holding above the $4,000 level that central banks have supported through a year of reserve diversification.

The repricing reached the newest large listing. SpaceX, which began trading on June 12 at $135 a share, had risen toward a $2.6 trillion valuation before falling back. The Russian outlet RBC reported the company's market value had fallen by more than $550 billion from its weekly high, though the shares were still up about 37 percent from the offering price.