Deutsche Bank’s US economists expect the first Federal Reserve meeting under Chair Kevin Warsh to keep rates unchanged but shift guidance. They anticipate removal of the prior easing bias and a dot plot that no longer signals a 2026 rate cut, while fed funds futures now price modest additional hikes as markets scale back expectations for dovish rhetoric.
New Chair Seen Dropping Easing Bias
Today’s Federal Reserve decision marks the first under Kevin Warsh as Chair. While the Fed is widely expected to keep rates on hold, a new Chair often leads to higher market volatility as participants work to assess his communication style and reaction function, making the meeting potentially eventful even in the absence of a rate change.
Deutsche Bank’s US economists expect the statement to drop the easing bias present in the previous decision, and anticipate that the median dot plot will no longer signal a rate cut in 2026, as the March projection did.
On the market pricing side, fed funds futures are currently pricing in 21 basis points of hikes by year-end. That figure rose by 1.3 basis points in the prior session, even amid a broader rates rally, reflecting diminished expectations for any dovish tone from Warsh at his first meeting as Chair.
