Fed Preview: Worsh's First Decision (with Nathan Hager)

New Fed Chair Kevin Worsh faces his first policy meeting amid war-driven inflation. The key question is whether the Fed drops guidance implying rate cuts and what the dot plot shows. Worsh must demonstrate independence from political pressure. Former Chair Powell will likely stay in the background.

implicit

NDX

RUT

Oil

Metals

USD

Bloomberg 7.0
Financial Media
Michael McKee 4.5

Fed Preview: Worsh's First Decision (with Nathan Hager)

yields

McKee expects the Fed to leave rates unchanged and drop rate-cut guidance, keeping the statement neutral. This suggests yields remain rangebound in the near term as markets digest the new communication.

Nathan Hager

All eyes on the Fed's June policy meeting, the first for new Chair Kevin Worsh. The market is watching how the Fed reacts to elevated price pressures and labor market shakiness.
Michael McKee

Worsh is under pressure to demonstrate independence. Trump initially wanted rate cuts, but war-driven inflation has changed the calculus. The Fed will likely drop guidance about 'considering further rate moves' and leave the statement neutral.
Nathan Hager

Worsh has been critical of Fed communication, including the dot plot. Will he address this in his first meeting?
Michael McKee

Worsh thinks Fed officials talk too much and opposes the dot plot for locking members into positions. But he's only been in the job two weeks, so he may let the process go forward this month.
Nathan Hager

Former Chair Jay Powell will be in the room. How does that dynamic work?
Michael McKee

Powell will do his best to fade into the background. He doesn't want to be the shadow Fed chair or interfere with Worsh. Only a very strange decision would lead him to dissent.

SignalTube

markets at a glance