The Fed made its first decision under Kevin Warsh: rates remain stable. But the press release and economic projections take an unexpected turn, revealing a firmer stance in the face of inflation. A surprise which marks the start of a new monetary era.
In brief
- The Fed keeps its rates stable under Kevin Warsh, as expected.
- The press release and projections reveal a hawkish turning point, with a possible rate increase by the end of 2026.
- Persistent inflation and geopolitical tensions justify this change in posture.
Fed: Kevin Warsh keeps rates stable
The Fed has just frozen its key rates following its first meeting under the presidency of Kevin Warsh, confirming market expectations. However, it was the press release accompanying the decision that left its mark. As observers anticipated continuity with the Jerome Powell era, the Fed removed its bearish bias, clearly signaling that its next action could be a rate hike.
Updated economic projections confirmed this turnaround. Indeed, where a decline was still envisaged three months ago, nine of the 18 members of the FOMC now anticipate an increase by the end of the year. Persistent inflation, fueled by soaring energy prices and geopolitical tensions, has forced Warsh's hand. The new president of the Fed, known for his rigorous approach to price stability, has thus laid the foundations for a stricter monetary policy.
Crypto in turmoil: Bitcoin and Ethereum facing the Warsh dilemma
For Bitcoin and Ethereum, the Fed's decision is a cold shower. Historically, digital assets hate high rates because a strong dollar and rising borrowing costs stifle liquidity, the windfall that fuels bull runs. With Warsh threatening to tighten the screw, the crypto market is expecting the worst… A brutal correction of BTC below $50,000 and ETH below $2,500 in the short term.
However, all is not dark. Indeed, maximalists point out that BTC could just as well shine in a context of persistent inflation. So if the Fed tightens the screw too much, investors could rush to deflationary assets and BTC in the lead. Ethereum, for its part, is banking on its technical updates to attract institutional investors, despite a hostile macro environment.
Warsh's Fed draws a line under the era of accommodative rates. For crypto, it’s time for difficult choices: flee or resist? What if the real winner was the dollar? And you, are you betting on a resilient bitcoin or a historic collapse?
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