Investors adjust expectations as Fed Chair Warsh signals potential rate hikes by year-end amid persistent inflation risks.
Investors are dialing back expectations for Federal Reserve interest-rate cuts after Chair Kevin Warsh hinted at a more hawkish stance. The shift follows rising bond yields and inflation forecasts tied to surging oil prices amid the prolonged Iran conflict, which has delayed anticipated energy price declines.
Earlier assumptions of near-term rate cuts have given way to projections of possible hikes by the end of 2024. The Dow hit a record high on Warsh’s May 22 appointment, but markets now absorb signals from Fed officials and Wall Street analysts pointing to tighter policy.
The pivot contrasts with President Donald Trump’s push for aggressive rate cuts to 1% or lower. WEBs Investments CEO Ben Fulton noted markets are reacting to the Fed’s hawkish tone, reflecting heightened inflation concerns.