The financial world is bracing for a major shift as Kevin Warsh prepares to be officially sworn in as the next chair of the US Federal Reserve Board of Governors this Friday. While markets are closely watching the transition, a growing wave of experts and lawmakers are voicing deep concerns over what this leadership change means for the central bank’s fiercely guarded independence—especially when it comes to setting interest rates.
Warsh steps into the role following a successful, largely party-line confirmation vote in the US Senate on Wednesday. He succeeds Jerome Powell, who faced intense, public friction with President Donald Trump. Over the last few months, Trump repeatedly threatened to fire Powell, openly criticizing him and stating that the Fed chair “should be lowering interest rates.” Though Trump originally nominated both Powell and Warsh during different terms, his expectations for Warsh are no secret. In April, Trump took to social media to state he would be deeply disappointed if Warsh didn’t move immediately to cut rates upon taking office.
Despite political pressure for cheaper borrowing costs, Wall Street and prediction markets are rapidly pricing out the likelihood of any imminent rate cuts.
Prediction Markets and FedWatch Data Point to Steady Rates
If the Trump administration is hoping for a quick drop in interest rates, the data suggests they shouldn’t hold their breath. Bettors and analysts alike have drastically adjusted their expectations over the last few months, signaling that the Fed is likely to keep its current monetary policy steady for the foreseeable future.
On prediction market platforms like Kalshi, the probability that the central bank will lower interest rates before 2027 has plummeted to just 38.2%. To put that in perspective, that same bet carried a staggering 96% certainty back in February.
Traditional financial metrics mirror this skepticism. The CME FedWatch Tool currently shows a whopping 98.8% probability that the Fed will leave its benchmark interest rates untouched—currently sitting at 3.50% to 3.75%—through the end of June. Looking slightly further out, there is still a 94% chance that rates will remain exactly where they are through July.
As chair, Warsh will wield massive influence over the Federal Open Market Committee (FOMC), the body responsible for steering US monetary policy. All eyes will now turn to the next FOMC meeting scheduled for June 16, which will serve as Warsh’s first major test under the macroeconomic microscope.
Senate Critics Raise Alarms Over Crypto Assets and Regulatory Vacancies
Warsh’s road to confirmation wasn’t without fierce pushback. During his Senate Banking Committee hearing, critics raised serious questions regarding potential conflicts of interest and the erosion of the central bank’s neutral stance. Massachusetts Senator Elizabeth Warren led the opposition, warning that confirming Warsh could open the door to the Fed “granting special accounts to [the Trump family’s] crypto company or bailouts to his friends on Wall Street if they get into trouble.” Ahead of his April hearing, Warsh disclosed over $100 million in personal assets, which included significant investments in both artificial intelligence and cryptocurrency firms.
Meanwhile, Warsh’s swearing-in highlights a broader vacuum in Washington’s financial regulatory landscape. Lawmakers are still waiting on the White House to announce key nominations for the Commodity Futures Trading Commission (CFTC), the nation’s commodities regulator.
Since December, the CFTC has been operating under the sole leadership of Trump’s pick, Michael Selig, who stepped in for acting chair Caroline Pham. The agency has recently been locked in a turf war to gain exclusive oversight of prediction platforms like Kalshi and Polymarket, especially as state authorities launch lawsuits against these platforms over sports betting.
The lack of a full roster at the CFTC has sparked bipartisan urgency. Leaders of the House Committee on Agriculture from both sides of the aisle issued a joint call for the administration to “nominate a full panel” of commissioners to handle “urgent regulatory issues.” Capitol Hill is particularly anxious about how the undermanned agency will handle upcoming rulemaking if the Digital Asset Market Clarity Act (CLARITY)—a high-stakes bill designed to establish a definitive regulatory framework for cryptocurrencies—officially becomes law.
