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Warsh Faces Spotlight as Federal Reserve Expected to Hold Interest Rates Steady

The Daily Desk — Wed, 17 Jun 2026 06:18:23 +0000

WASHINGTON – The Federal Reserve is widely expected to keep its benchmark interest rate unchanged at about 3.6% as new Chair Kevin Warsh leads his first policy meeting and prepares for a closely watched press conference, according to expectations outlined in Associated Press reporting.

The meeting marks the start of Warsh’s tenure at the central bank. Policymakers are likely to maintain current rates while signaling possible changes in how the Fed communicates future policy decisions.

Markets, economists, and political stakeholders are closely watching the outcome. They are looking for signals on both interest rates and the Fed’s broader communication strategy.

According to the Associated Press, the central bank is expected to hold rates steady for a fourth straight meeting. Officials may also adjust their post-meeting statement. One possible change would be removing language that suggests rate cuts are the next step. Such a move could signal a longer period of stability or even openness to future rate increases if inflation stays high.

Warsh, a former Federal Reserve Board governor and investment banker who served from 2006 to 2011, will also hold his first post-meeting news conference in the afternoon. Financial markets and the White House are expected to closely follow his remarks, especially his tone and policy outlook.

The meeting comes at a time of mixed economic signals and persistent inflation, creating a complex environment for the new chair.

Inflation and Jobs Data Shape Policy Debate

Inflation has risen to a three-year high of 4.2%, according to figures cited in Associated Press reporting. Rising energy prices, linked in part to the Iran war that began earlier this year, have added pressure.

The Federal Reserve typically responds to high inflation by raising interest rates to slow spending and economic growth.

At the same time, the labor market has shown strength. A government report cited by the AP found that employers added 172,000 jobs in May. This marked the third straight month of solid job growth.

Stronger hiring reduces pressure on the Fed to cut rates. However, inflation has remained above the central bank’s 2% target for more than five years. Together, these trends leave policymakers with limited clarity on the next policy move.

Debate Over Fed Communication Strategy

Beyond interest rates, Warsh’s leadership is expected to draw attention for possible changes in how the Federal Reserve communicates with the public.

According to the Associated Press, Warsh has previously supported reducing the Fed’s public messaging footprint. One idea under discussion would cut the number of scheduled press conferences from eight per year to four. This would return to a model used during former Chair Ben Bernanke’s tenure.

Supporters say fewer public appearances could give policymakers more flexibility in decision-making. However, critics warn that reduced transparency could unsettle financial markets and make the Fed’s policy direction harder to understand during uncertain economic conditions.

Warsh’s first press conference will be closely watched for signals on whether he intends to reshape the Fed’s communication approach or maintain its current framework.

Economic Uncertainty and Policy Pressure

Global and domestic factors are adding further complexity to the Fed’s outlook. Inflationary pressure has been amplified by energy market disruptions tied to the Iran conflict. Uncertainty remains over whether a recently announced peace agreement will hold and stabilize oil prices.

Even if energy markets recover, economists cited by the Associated Press say price relief for goods such as groceries, airfare, and fuel may take months to appear.

Earlier Federal Reserve projections had suggested possible rate cuts this year. Those expectations were based on concerns about weakening employment. However, stronger-than-expected job growth has reduced the urgency for easing monetary policy.

Political pressure also continues. President Trump has repeatedly called for lower interest rates but has also said Warsh should act independently. This reflects ongoing debate over the Fed’s autonomy in managing inflation and economic stability.

Former Fed Chair Jerome Powell, who remains on the Board of Governors, is expected to vote in Wednesday’s decision, adding continuity during the leadership transition.

Tags: Federal Reserve, Kevin Warsh, Interest Rates, Monetary Policy, Inflation, Labor Market, Central Bank Policy, US Economy, Financial Markets, Fed Communication

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Asian Stocks Climb as Markets Cheer Ceasefire and Fed Patience

The Daily Desk — Wed, 25 Jun 2025 06:19:56 +0000

Asian Markets Rise as Investors Eye Fed Moves and Cooling Oil Prices

Stocks edge higher after Powell’s wait-and-see message, as tensions ease in the Middle East

Asian markets posted modest gains Wednesday, following Wall Street’s rally and signs of easing geopolitical tensions in the Middle East. Investors are now shifting their focus to the Federal Reserve and the potential impact of tariffs and oil prices on the global economy.

In testimony to Congress on Tuesday, Federal Reserve Chair Jerome Powell signaled that the Fed is in no rush to cut interest rates — a stance that contrasts sharply with former President Donald Trump’s calls for immediate action.

“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell said before the House Financial Services Committee.

Oil Prices Bounce Back, but Remain Below Pre-Conflict Levels

Oil prices rebounded slightly early Wednesday after tumbling roughly 6% on Tuesday. The drop followed a fragile but holding ceasefire between Israel and Iran, easing fears that the conflict might disrupt global oil supplies.

U.S. crude rose 1.2% to $65.16 a barrel
Brent crude added 1.1%, reaching $66.95

Despite the slight uptick, oil remains cheaper than it was before the conflict erupted nearly two weeks ago — good news for consumers and central bankers trying to rein in inflation.

“Easing stress in energy markets is excellent news for everyone who doesn’t want to see higher oil prices translating into accelerating inflation and tighter monetary policy,” said Ipek Ozkardeskaya of Swissquote Bank.

Asian Markets Follow Wall Street’s Lead

Investor confidence seems to be rebounding. After Trump announced the Israel-Iran ceasefire, global markets rallied. On Tuesday, the S&P 500 surged 1.1%, climbing back within 0.8% of its record high from February. The Dow Jones jumped 1.2%, and the Nasdaq added 1.4%.

That momentum carried over to Asian trading early Wednesday:

Japan’s Nikkei 225: +0.3% to 38,917.08
Hong Kong’s Hang Seng: +0.9% to 24,386.59
Shanghai Composite: +0.5% to 3,437.10
South Korea’s Kospi: +0.2% to 3,110.19
Australia’s S&P/ASX 200: +0.1% to 8,562.90
Taiwan’s Taiex: +1.1%
India’s Sensex: +0.7%
Thailand’s SET: -0.4%

“The world can now move on to face other difficult choices like tariffs and things like that,” said Frances Lun, CEO of GEO Securities in Hong Kong. “The market is well on its way to rebound and could again reach new levels.”

Fed Remains Cautious Amid Tariff Uncertainty

While the ceasefire and falling oil prices are calming markets, the Federal Reserve is keeping a close eye on another wildcard: tariffs.

The Fed has made it clear that it’s not ready to act until it sees more data on how the recently imposed tariffs — part of Trump’s broader economic strategy — will impact inflation and growth. Tuesday’s consumer confidence report came in weaker than expected, though inflation remains only slightly above the Fed’s 2% target.

Currency Markets

In currency trading:

The U.S. dollar rose to 145.10 Japanese yen from 144.93 yen
The euro edged up slightly to $1.1617 from $1.1610

Source: AP News – Asian shares gain as investors shift focus to Federal Reserve, tariffs

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Fed Lowers Rates, But Fewer Cuts Ahead Shock Investors

The Daily Desk — Thu, 19 Dec 2024 02:05:41 +0000

CNBC Daily Open: Why Markets Crumbled After Fed’s Rate Cut

Key Takeaways:

The Federal Reserve reduced interest rates by 25 basis points but projected fewer rate cuts in 2025 than previously anticipated.
U.S. markets faced a sharp sell-off, with major indices experiencing significant losses.
Investor disappointment stemmed from dashed expectations of aggressive rate reductions in the near future.

Fed’s Decision: A Modest Cut but a Tighter Future

On Wednesday, the U.S. Federal Reserve lowered its interest rate by 25 basis points, setting its target range to 4.25%-4.5%. While this marked a step toward easing monetary policy, the central bank’s updated projections signaled only two rate cuts for 2025—a notable downgrade from the four cuts anticipated in September.

This revised outlook delivered a blow to markets that had hoped for a more aggressive easing trajectory.

Market Reaction: A Sell-Off Frenzy

U.S. markets tumbled in response to the Fed’s announcement:

Dow Jones Industrial Average: Dropped over 1,000 points (-2.58%), marking its 10th consecutive day of losses.
S&P 500: Declined 2.95%.
Nasdaq Composite: Fell 3.56%.

Across the Atlantic, the Stoxx 600 in Europe closed up 0.15% before the Fed’s decision, escaping the U.S. market’s turbulence.

Individual Stock Movements: Tesla and Micron Hit Hard

Tesla: Shares plummeted 8.3%, their steepest one-day drop since November 2016, as analysts flagged the stock’s disconnect from fundamentals amid broader market weakness.
Micron: The chipmaker’s stock plunged more than 15% in extended trading. While it exceeded last quarter’s earnings expectations, Micron issued a disappointing revenue forecast of $7.9 billion for the current quarter, well below analysts’ estimates of $8.98 billion.

Why Investors Were Disappointed

The markets’ reaction wasn’t about the Fed’s actual rate cut—it was about the revised dot plot.

Before the Fed meeting, markets widely expected the 25 basis-point reduction, with futures pricing in a 98% probability of the move. Investors had even hoped for another rate cut as soon as January, with an 81.6% chance forecasted.

However, Fed Chair Jerome Powell quashed those expectations.
“With today’s action, we have lowered our policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive,” Powell said.
“We can therefore be more cautious as we consider further adjustments to our policy rate.”

Following Powell’s comments and the updated projections, the chance of another January rate cut plummeted to just 6.4%.

The Emotional Blow: A Shift in Market Sentiment

This shift in expectations felt like a harsh reality check for investors. The optimism that drove recent market performance crumbled as hopes of aggressive rate cuts gave way to the Fed’s cautious tone.

David Russell, global head of market strategy at TradeStation, summed up the sentiment:
“Good-bye punch bowl. No Christmas cheer from the Fed.”

Bottom Line: The Power of Expectations

Wednesday’s sell-off is a reminder of how markets often move not on present actions, but on expectations for the future. The Fed’s decision to moderate its easing plans, coupled with Powell’s cautious messaging, recalibrated investor sentiment—leading to the dramatic market retreat.

For now, markets will closely watch every word and signal from the Fed, as the balance between cautious optimism and economic reality continues to shape financial markets.

Source

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Stocks Drift to Mixed Close as Inflation Report Signals Potential Rate Cut

The Daily Desk — Thu, 14 Nov 2024 00:23:05 +0000

Stock Market Update: Wall Street Ends Mixed After Inflation Report Sparks Rate-Cut Hopes

NEW YORK (AP) — U.S. stocks ended with mixed results on Wednesday as a recent inflation report raised expectations of an interest rate cut by the Federal Reserve next month.

The S&P 500 was nearly flat, inching up less than 0.1%, following its first decline since last week’s post-Election Day rally. Meanwhile, the Dow Jones Industrial Average gained 47 points, or 0.1%, and the Nasdaq composite slipped by 0.3%.

Bond Market Reaction and Rate-Cut Expectations

The bond market also showed mixed results. Consumer inflation increased from 2.4% to 2.6%, as economists expected. However, “core inflation” (which excludes volatile categories like food and energy) remained steady, an indicator of long-term trends that economists say is more predictive. This stability strengthened expectations for a December rate cut.

“Bang in-line core inflation leaves the Fed on track to cut rates in December,” said Lindsay Rosner, head of multi-sector fixed income at Goldman Sachs Asset Management.

Since September, the Federal Reserve has gradually reduced interest rates from a two-decade high to support the job market and bring inflation near its 2% target. After the last rate cut in October, traders now see an 80% chance of a third cut in December, according to CME Group data.

Following the inflation report, the yield on the two-year Treasury fell to 4.27% from 4.34% on Tuesday. The 10-year Treasury yield, influenced by long-term growth expectations, initially dropped but eventually rose slightly to 4.45%.

Uncertainty for 2025 and Potential Economic Changes

Looking forward, questions remain regarding the Fed’s plans for 2025. Previous Fed forecasts indicated potential further rate cuts into next year, but Donald Trump’s recent election victory may change that trajectory. Trump’s support for lower taxes, higher tariffs, and reduced regulation could lead to increased government debt, higher inflation, and accelerated economic growth, potentially altering rate cut plans.

“While lower rates can boost the economy and stock prices, they can also fuel inflation,” noted Scott Wren, senior global market strategist at Wells Fargo Investment Institute. “The market may be at an inflection point, with inflation potentially turning upward.”

Stock Highlights

On Wall Street, Rivian Automotive surged 13.7% after it shared more details about its joint venture with Volkswagen Group, which could reach a total size of $5.8 billion, exceeding prior estimates.

In contrast, Spirit Airlines stock fell 59.3% after the company filed for debt renegotiation, which, if successful, could affect shareholder equity but protect employees and customers.

By the end of trading, the S&P 500 rose 1.39 points to close at 5,985.38. The Dow gained 47.21 points, reaching 43,958.19, while the Nasdaq declined by 50.66 points to finish at 19,230.74.

Global Markets and Cryptocurrency Movements

Internationally, Japan’s Nikkei 225 dropped 1.7% following a surge in wholesale inflation to its highest level since July 2022. South Korea’s Kospi fell 2.6%, affected by a significant decline in Samsung Electronics shares.

In the cryptocurrency space, Bitcoin crossed above $93,000 before pulling back below $90,000. President Trump has embraced cryptocurrencies, pledging to make the U.S. the global crypto capital. Meanwhile, Dogecoin (favored by Tesla’s Elon Musk) also pared earlier gains after Trump appointed Musk to head the “Department of Government Efficiency,” or “DOGE” for short.

Source

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