Federal Reserve Chairman Kevin Warsh has indicated a possible rate hike by the end of 2026 in his debut press conference. Warsh unveiled an ambitious review with broad ramifications and emphasized the central bank’s resolve to bring inflation under control.

Market Reaction

Markets have fully priced in a rate increase from the Fed by October, lifting the U.S. Treasury yields and the dollar. The Fed’s quarterly projections revealed that nine of the Fed’s 19 policymakers now expect at least one rate hike by the end of 2026.

Warsh advised markets to price assets based on their own reading of the economy, rather than second-guessing how central bank officials interpret the data. This approach, he said, would spare the Fed a scenario in which financial markets are merely reflecting back what the Fed has said.

Global Implications

The Bank of England is expected to hold rates at 3.75% later on Thursday as it weighs the impact of a tentative truce in the Iran war on inflation. The dollar’s strength has cast a long shadow across currency markets, leaving the yen on edge as intervention fears resurface following fresh jawboning from Tokyo.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.