There Are Some Good Reasons Why New Fed Chairman Kevin Warsh Will Signal Future Rate Cuts to Markets and Traders in First FOMC Presser

The Dow Jones Industrial Average made a new all-time closing high on Tuesday, as the first session of the two-day FOMC meeting got underway, led by Trump-appointed Chairman Kevin Warsh. The NASDAQ and S&P slipped a bit, though it was mostly profit-taking, given the gains on Monday from the peace deal MOU worked out between Iran and the United States.

Entering Wednesday, with Warsh's first policy statement and press conference about to make waves at 2:00 pm ET, markets aren't anticipating anything out of the ordinary from Warsh. Fed analyzers will be looking for forward clues to the Warsh Fed's general policy and direction.

Warsh faces the tough choice between pleasing President Trump, who is desirous of lower rates and responding to increasing pressures from inflation, which would more than likely favor raising rates. The new chairman may have caught a break with the Iran-U.S. peace deal, as oil prices have eased lower and gas at the pump, according to gasbuddy.com, is just below $4 ($3.99) for the first time in more than two months. That gives Warsh some leeway. If he mentions that gas and energy prices have been the main contributors to the increase in inflation, he can just brush raising rates aside, placing the blame for higher prices on the Middle East situation, which has just now changed for the better.

That would seem to be the most likely scenario for Warsh, who was Trump's choice for Fed Chairman primarily because he would align himself with the president's fiscal policies, one of which is to lower the cost of financing the government's massive debt load, poised to exceed $40 trillion within the next few months. Lower rates for servicing that debt would go a long way toward helping Republicans retain the House and Senate, a tall order, though nonetheless thought to be within reach by staunch "conservatives."

Thus, cutting interest rates, or, at least any mention of such intention, leans strongly in Warsh's favor. He gets to please Mr. Trump, goose stocks higher and cut the cost of serving the government debt.

Win-win-win.

Traders are likely to be in wait-and-see mode until 2:00 pm ET, when the formal policy statement is announced with the high probability that the Fed will keep the federal funds target rate at 3.50-3.75%, where it has been since December, 2025. Because the vast majority of Fed watchers expect no change at this meeting, fireworks on the stock and bonds markets will most probably ensue during Warsh's press conference, which kicks off at 2:30 pm. From then until the 4:00 pm close might see some wild swings, depending on how adept Warsh appears at projecting confidence and quietly tipping his hand towards future Fed dealings.

The real test of Warsh's signaling will come Thursday, after market participants have had time to assess what was said. Tying into the general state of affairs is Friday's signing of the MOU in Geneva, by VP Vance and Iranian representative, Speaker of the Parliament, Mohammad Bagher Ghalibaf.

Some wise guy traders might even take the opportunity to audaciously initiate new positions before the Fed announcement as the policy seems to favor cutting rates as opposed to raising them.

All of this makes for an interesting remainder of the week.

At the Close, Tuesday, June 16, 2026: Dow: 51,999.67, +328.64 (+0.64%) NASDAQ: 26,376.34, -307.60 (-1.15%) S&P 500: 7,511.35, -42.94 (-0.57%) NYSE Composite: 23,704.03, +30.37 (+0.13%)