Markets are holding their breath ahead of tomorrow’s Fed Day, Wednesday, June 17, 2026, when the US central bank will make its first decision on the federal funds rate under new Chair Kevin Warsh.
The meeting of the FOMC (Federal Open Market Committee, the Federal Reserve’s monetary-policy arm) gets underway today, Tuesday, June 16. The rate decision will land at the usual time, 2:00 PM Eastern (8:00 PM in Italy), followed at 2:30 PM by the press conference in which Warsh will face reporters for the first time as Fed chair.
Rates on hold at 3.5%–3.75% in Warsh’s debut, but Trump’s would-be dove has his hands tied
For tomorrow, the consensus is for rates to stay unchanged in the 3.5%–3.75% range, as they did at the central bank’s last meeting under Jerome Powell on April 29 — a meeting that, it should be said, exposed considerable tension over what to do next.
Tapped by Donald Trump to replace his predecessor Powell and usher in a new phase of monetary policy centered on rate cuts, Warsh is unlikely, under current conditions, to grant the president his wish. If anything, the risk is that he too ends up being sharply criticized by Trump for failing to lower rates.
The point is that, right now, there is nothing to justify announcing rate cuts. Quite the opposite: with US inflation now running close to double the Fed’s target, economists and analysts have already begun drawing up estimates of when the Fed will raise rates instead.
The expert view on hike risk: the US inflation danger line that worries Warsh
Money.it gathered analysts’ views on the future of US monetary policy. The odds of cuts now look to have collapsed: in May, inflation as measured by the Consumer Price Index (CPI) jumped 4.2% year over year in the United States, with the energy component driving prices higher on the back of the US-Iran war.
Another warning signal came from the core PCE index — the Personal Consumption Expenditures gauge the Fed watches most closely when setting rates — which surged 3.3% in April. The numbers show a macro backdrop that has turned decidedly hawkish.
That is also the view of the experts canvassed by Money, among them Paul Ferrara, Senior Wealth Counsellor and Client Relationship Manager at Avenue Investment Management, who said that «the very idea of a rate cut no longer carries the same credibility», noting that by now «about 70% of the market seems to have accepted this reality», even if «that has not yet translated into a shift in monetary policy».
There is also one factor that, according to Ferrara, «could prevent Kevin Warsh from waiting — and therefore from continuing to hold rates steady: core inflation above 3% for three consecutive months». At that point, Warsh would be forced to raise rates.
The new Fed is the most crucial factor for portfolios: watch Treasuries and duration
Ferrara went on to note that the evolution of the Federal Reserve’s stance is one of the most important themes to monitor for portfolio positioning — which is why Avenue Investment Management has already acted, «following this Fed transition and its implications for investment strategies very closely».
Among Avenue’s decisions: adopting a more cautious approach as early as the first half of 2026. «We have progressively reduced the duration of our portfolios and increased exposure to short-maturity fixed-income instruments. That choice alone allowed a client with roughly $400,000 invested in long-dated bonds to avoid estimated unrealized losses of about $18,000.»
He did not spare investors and savers a warning. Ferrara observed that, with «a Fed less inclined to give the market advance guidance, 10-year Treasury yields are recalibrating expectations more quickly and aggressively», adding that «a 5% yield is no longer just one of several possible scenarios: it is becoming a scenario to take seriously».
So, a wave of selling on Treasuries after tomorrow’s US rate decision and Warsh’s first remarks to the press? Ferrara warns that «for investors with significant duration exposure, the effects could be immediate, and many are not yet fully aware of it». More broadly, adjusting portfolios now «is even more crucial given that the dot plot could be eliminated».
No more cut signals: the macro data no longer supports them. The end of the dot plot?
Also notable is the comment to Money.it from Steve Case, a consultant active in the financial and insurance sector of the UK market, who argued that Warsh will strip out any reference in the FOMC statement that might suggest a Fed inclined to cut rates: «This is language that can no longer exist with these labor-market numbers», he said, citing the latest figures from the great market mover that is the US jobs report — the Non-Farm Payrolls.
Looking ahead, Case too pointed to a number that, in his view, «really makes the difference»: the 3% threshold for the core PCE index — a level that has, in fact, already been breached. «The Fed reacts only if core PCE accelerates again above the 3% threshold, and not because it heeds market pressure or the noise of politics.»
As for what would happen to markets without the dot plot, Case anticipated that, «following the removal of the dot plot, I would not be surprised to see 10-year Treasury yields jump by 20 to 30 basis points». After all, «historically, every time the Fed changes its approach to communication, the market tends to recalibrate rate expectations quickly».
In short, scrapping the dot plot would push «volatility higher in the short term». The situation would settle down over the «long run», the financial adviser said, because «clearer and more consistent communication will help strengthen the Federal Reserve’s credibility».
Where will Kevin Warsh stand in the dot plot?
On the dot-plot question — the quarterly «dot plot» is the chart, published by the FOMC every quarter since 2012, in which the 19 members of the US central bank plot their projections for the path of rates — economists at TD Securities, interviewed by Reuters, noted that Warsh could choose not to include his own forecast in the famous chart (which will be published tomorrow regardless), in order to «minimize any hawkish message — that is, of rate increases — that might emerge from the June dot plot». In other words, to avoid making the pill the markets already have to swallow any more bitter.
Other analysts said instead that Warsh could decide to contribute to the dot plot with a very specific aim: to launch a review of Fed communication that could spell the end of the document itself, long regarded as useful guidance. «We believe Warsh will present his own projections», said Michael Feroli, chief economist at JPMorgan, because «not doing so would give the impression of a snub toward his own committee».
Money.it also spoke with Rami Sneineh, an insurance broker and owner of the US brokerage Insurance Navy Brokers, who said he believes a dovish bias is now out of place in the current macro context, stressing that «removing the dovish bias would not be a restrictive move, but a choice consistent with the data: keeping language oriented toward rate cuts would by now contradict how the economy is evolving».
On the chance that US rates could be raised again — as has happened, after all, with Christine Lagarde’s ECB, which just announced its first monetary tightening since September 2023 — Sneineh aligned with other analysts, saying on the one hand that «there is no single event capable of triggering a rate hike in 2026», while noting on the other that «the scenario to watch would instead be a reacceleration of core PCE to 3% for two consecutive months».
Sneineh also pointed out that «late payments on auto loans by riskier borrowers in Texas and Illinois are already rising, and these signals often emerge before the deterioration shows up in the more closely watched macroeconomic data».
A steep bill for US consumers: forecasts of higher estate taxes
On the inflation danger line that could put Kevin Warsh on alert if it keeps being breached, Chad Silver, founder and CEO of Silver Tax Group — a US law firm that provides advisory services to investors — also weighed in. Silver too identified it as a core PCE reading above 3%.
If the elimination of the dot plot were added to that situation, Silver warned, the consequences could be more significant, hitting the 10-year Treasury market in particular — as Steve Case also flagged — to the detriment of American consumers, who would face markedly higher estate taxes: «In the past I have seen 10-year Treasury yields move by about 40 basis points following this kind of change in Fed communication. For families already pursuing wealth-transfer strategies, a shift like that can translate into an estate-tax increase of hundreds of thousands of dollars.»
Tough times, then, for US consumers and businesses, set to keep paying the price of higher inflation, the risk of a hawkish Fed on rates, steeper mortgage rates and financing costs, and a sharp rise in estate taxes.
Editor’s note
This article was originally published in Italian on money.it by Laura Naka Antonelli on June 16, 2026 as «Previsioni riunione Fed, cosa aspettarsi il 17 giugno? Rischio rialzi tassi da Warsh, gli effetti sul portafoglio». It has been translated and adapted for an international audience by the Money.it International desk.
