Headline: New Fed Chair Warsh Signals Hawkish Stance, Market Ramps Up Rate Hike Bets

Federal Reserve Chair Kevin Warsh chaired his first Federal Open Market Committee meeting, significantly streamlining the policy statement and omitting his personal interest rate forecast. Warsh announced five new working groups to overhaul the Fed's communication and economic analysis, signaling a potential shift towards a more hawkish monetary policy. Following the meeting, market participants are re-evaluating the rate path, with CME Group data showing the probability of a September rate hike rising from approximately 30% to over 50%. Warsh emphasized the Fed's commitment to restoring price stability, stating, "We haven't done well in the past five years, and now we will fix it." He offered few specifics on future rate decisions, often referring to the new working groups. This approach, along with the absence of forward guidance and a divided dot plot among officials, has led analysts, including the Wall Street Journal's Nick Timiraos, to suggest Warsh could be more aggressive in combating inflation than his predecessor, Jerome Powell. BNP Paribas' chief U.S. economist James Egelhof predicts three consecutive rate hikes beginning in December 2026.