Fed Chair Warsh signals prolonged high rates, dashing rate-cut hopes and weighing on crypto markets.
The Federal Reserve left its benchmark rate unchanged at 3.50% to 3.75% during Kevin Warsh’s first meeting as chair, matching expectations. However, the Fed’s updated dot plot revealed a hawkish shift, with the median 2026 rate projection rising to 3.8% from 3.4% in March, implying at least one hike this year instead of a cut. Half of the committee now favors a hike as soon as 2026, citing persistent inflation and a strong labor market.
Warsh’s press conference reinforced the hawkish stance, emphasizing the Fed’s commitment to price stability. His remarks removed prior expectations of rate cuts, surprising markets and triggering a sell-off in risk assets. Bitcoin (BTC) fell 1% to $64k, while MicroStrategy’s stock (MSTR) dropped 5% as its STRC token hit a new low of $89.
The crypto sector also faced regulatory pressure, with Illinois passing a 0.2% tax on broker transactions and holdings, the first U.S. state to do so. Meanwhile, CME filed a lawsuit against the CFTC over its approval of perpetual futures in the U.S.