Despite Warsh Replacing Powell at the Fed, Traders See No Rate Cut Coming in June

Key Takeaways:

• Kevin Warsh cleared a 13-11 Senate Banking Committee vote on April 29, replacing Powell as Fed Chair in May 2026.
• Polymarket traders priced a 96% chance the Fed holds rates steady at the June 17 FOMC meeting.
• Warsh signals rate cuts tied to AI productivity gains, but inflation at 3.3% may limit his options in June.

Kevin Warsh to Step In as Fed Chair, but Markets Still Price a June Rate Hold Above 93%

Jerome Powell hosted his final FOMC meeting as chairman on the same day Warsh was cleared. His term as Fed chair expires May 15, 2026. The committee approved Warsh’s nomination in a 13-11 party-line vote, sending his confirmation to the full Senate for a final vote expected in early May.

Powell stepped down as chair but retains the option to remain on the Board of Governors through 2028. Whether he stays alongside Warsh on the board is an open question, one that prediction market participants on Kalshi have flagged as a potential influence on June’s rate decision.

Warsh has signaled what he calls a “regime change” approach. He has pointed to artificial intelligence (AI)-driven productivity gains as a buffer against inflation and leaned toward rate cuts in his public remarks. But with inflation holding above 3% and geopolitical tensions pushing on energy prices, building consensus among the other 11 voting members will be his first real test.

This week, the Fed held the federal funds rate steady at 350-375 basis points at the April 29 meeting, the last chaired by Powell. That unchanged rate is now the baseline Warsh inherits when he takes the helm.

Although Warsh stands as U.S. President Donald Trump’s preferred candidate, and some speculate he could alter the prevailing direction, markets remain unconvinced that a June Federal Funds Rate (FFR) cut is on the table.

For instance, the CME Fedwatch Tool puts the probability of no change at the June 17 meeting at 93.3%. Futures traders assign a 6.7% chance to a cut that would drop the range to 325-350 basis points. The probability of a rate hike coming to fruition sits at 0.0%. The chance of a cut has ticked up slightly from 4.0% a month ago, but the consensus remains firmly in favor of a pause.

On Polymarket, the Fed Decision in June event has generated roughly $16.48 million in total trading volume as of May 3, 2026. The “No change” outcome holds a 96% probability, priced at 96 cents. A 25 basis point decrease sits at 3.6%, a 25 basis point increase at 1.1%, and both larger moves carry less than 1%.

Polymarket participants point to the March 2026 CPI reading of 3.3% and a stable labor market as the main drivers behind the hold consensus. Those two data points have kept the Fed in a data-dependent posture, and traders are not betting on Warsh breaking from that posture, at least in his first meeting.

Kalshi traders show similar conviction. The “Fed maintains rate” contract on that platform is priced at 95 cents, reflecting a 95% probability of no change. The odds of a 25 basis point cut sit at 6%, and a cut larger than 25 basis points carries a 2% probability. A separate contract tracking whether the fed funds rate stays above 3.25% commands a 98% confidence level.

Total betting volume on the prediction marketplace Kalshi market has reached $3,461,005. The price history shows sharp swings between January and March, when “maintain” and “cut” odds crossed each other frequently. Since April, the hold expectation has trended steadily higher.

The Kalshi market closes at 1:59 PM EDT on June 17, just before the official announcement. By then, Warsh will have chaired his first policy meeting and delivered his first rate decision as Fed chairman. Whether he breaks from the current 350-375 basis point range in June or holds Powell’s line, traders across both platforms have already placed their bets.