Financial markets expect the US Federal Reserve (FED) to keep interest rates unchanged at its next meeting on June 17, 2026.
This expectation remains strong even after Kevin Warsh became the organization’s president, a leadership change promoted by President Donald Trump. Our conservative monetary policy outlook remains unchanged in the short term..
There is a 98% chance that interest rates will remain in their current range, according to CME Group’s FedWatch tool.
The remaining percentage represents a very low residual option in which the Fed decides to cut interest rates by 25 basis points. This is equivalent to one quarter of a percentage point, the smallest change that the market considers highly unlikely in the current situation.
Implicit market probabilities for changes in the benchmark interest rate over the next few days predict continuity scenarios in near agreement. The majority of market participants are I’m betting the Fed won’t change interest rates at next week’s meeting.leaving the current level at 3.5% to 3.75%.
US inflation soars
The predicted stability directly corresponds to the main problem with which the Fed maintains the cost of money: the severity of rising inflation. As expected, the U.S. Bureau of Labor Statistics reported today, June 10, that: The consumer price index (CPI) in May increased by 4.2% compared to the same month last year.compared to 3.8% in April, the highest level since April 2023.
These numbers confirm the increase as the cost of living continues to rise for American consumers. Much of the increase in headline numbers is due to rising energy costs as a result of the war with Iran and the closure of the Strait of Hormuz.
As a result of the Middle East conflict, Brent crude oil prices reached $114 per barrel on May 4, fueling global inflation expectations. Even though oil prices are currently $92, the macroeconomic risks are still present and fully evident in inflation.
This price pressure is supported and exacerbated by the economy’s internal strength. While a strong labor market is good news from a social perspective, it remains a challenge for monetary policy as the labor market continues to exhibit extreme rigidities.
May records show that 172,000 new non-farm jobs were created. This robust workforce generates strong salary growth, sustains high consumption, and What fuels inflationary pressures? And the Fed has less incentive to lower interest rates in the short term.
Meanwhile, Mr. Trump has openly advocated immediate monetary easing. Trump said of his new coach in an interview: “Kevin is great. I want him to do whatever he wants to do. I don’t want to influence him too much, but we’ve had a great report. We’ve been doing great, but it’s unfair that every time we do well they want to raise the rate.”
The president claimed that Economic strength should not be punished by rising credit prices. In an interview on June 7, President Trump said, “When there’s good news today, the reason the market goes down is because you think interest rates are going to go up,” adding, “There’s no reason to raise rates.”
President Trump defends prosperity as sustained by cheap financing. “This country is getting bigger. We did great things and built this country with low interest rates. What they do when interest rates go up is try to kill success. I don’t want to kill success. We should just lower interest rates.”
This aggressive stance is not new to the Trump administration. The president repeatedly pressured former Federal Reserve Chairman Jerome Powell to lower interest rates.
Why do interest rates affect Bitcoin?
The Bitcoin (BTC) market is closely monitoring the Fed’s decisions, as they determine much of the world’s liquidity and costs. Interest rate is the price you pay for a loan. If it is high, credit becomes more expensive and consumption slows down to control inflation.
Lower interest rates make borrowing cheaper for businesses and investors. Additionally, conservative products (such as government bonds) have low yields, so a portion of your capital is often invested in riskier assets in search of higher returns. These contexts tend to be advantageous Investing in assets that are considered “risky” such as stocks, BTC, cryptocurrencies, etc.. Bitcoin prices typically benefit from low interest rates.
Conversely, if interest rates rise or the Fed withdraws liquidity from the financial system, the value of money increases and many investors lose money. Reduce exposure to assets considered at risk.
Warsh was sworn in as the 17th Chairman of the Board of Governors of the Federal Reserve System on May 22nd. According to a report from CriptoNoticias, Warsh has made clear in the past that Bitcoin is a “significant asset” and has become known among industry businessmen as “the first pro-Bitcoin Fed governor.”
The decision to keep interest rates stable next week means that the BTC market will continue to operate under the same current liquidity conditions. While Warsh’s arrival provides positive long-term expectations for Bitcoin and cryptocurrencies due to his positive philosophy towards Bitcoin, investors will need to understand that the cost of funds will not come down anytime soon.
