BNY strategists John Velis and David Tam preview the upcoming FOMC meeting under new Chair Kevin Warsh, expecting slightly hawkish changes to the statement and dot plot. They see the Federal Reserve signaling two-way risks to rates and dropping the projected 2026 cut, while not forecasting any rate cuts or hikes this year despite an improved outlook after the ceasefire.

New Fed Chair and hawkish tweaks

"We expect slightly hawkish changes to the statement and dots on Wednesday."

"The outlook improves on ceasefire, but we don’t expect rate cuts, or hikes, this year."

"Incoming Fed Chair Kevin Warsh presides over his first FOMC meeting this week, with the U.S.-Iran MOU adding a new consideration alongside the immediate monetary policy decision."

"We expect the FOMC statement to signal a clear two-way risk to rates, with the median dot likely dropping the single cut projected for end-2026."

"Warsh has been critical of forward guidance and may use the press conference — or limit it — to signal how much communication policy will change under his tenure."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)