The first Federal Reserve meeting under new Chair Kevin Warsh ended Tuesday with a unanimous 12-0 vote to hold the benchmark rate at 3.5–3.75%. The hold itself surprised no one. What caught markets off guard was what came next.
The real story was the dot plot — the chart that maps rate forecasts from each of the 18 FOMC members. Three months ago, most officials still penciled in at least one rate cut for 2026. Those projections are now gone entirely. Nine of eighteen members now expect a rate hike before year-end. Futures traders reacted fast, pushing the probability of at least one hike by December to 66%.
Behind the shift: inflation. The Fed's statement said prices remain above the 2% target, partly due to energy-sector supply shocks. Warsh had telegraphed from the start that price stability comes first — and the updated dot plot makes that concrete.
Crypto felt the hawkish shift almost immediately. Bitcoin fell 1.48% to $65,056. Ethereum dropped 2.54% to $1,755, XRP slid 2.46% to $1.19. BNB was the exception, rising 1.22%.
Should the Fed raise rates in the fall, it would mark the first tightening cycle in years — a real headwind for risk assets including crypto. Higher borrowing costs tend to push investors away from volatile positions. The next FOMC meeting is in September. That's when 66% odds either become policy, or quietly get marked down again.
