Uh-Oh! The Probability of an FOMC Rate Hike Is Rapidly Climbing.

Kevin Warsh has taken over as Fed chair from Jerome Powell on May 15, 2026, inheriting a challenging economic environment with rising inflation driven primarily by the Iran war and supply disruptions. Despite Trump and Wall Street's preference for interest rate cuts, the CME FedWatch Tool indicates growing probability of rate hikes over the next year, with a 40% chance of a 25 basis point increase by April 2027. Warsh's hawkish monetary policy record suggests a focus on price stability, potentially putting pressure on the historically expensive stock market.