President Donald Trump has made no secret of his desire for lower interest rates. But early indications are that he is willing to allow Federal Reserve Chairman Kevin Warsh some time before putting any public pressure on him to cut borrowing costs.
So far Warsh has kept his cards close to his chest, in line with his declared policy against offering signals of where rates are heading. However, traders reduced bets on rate increases following Thursday's weaker-than-expected jobs report.
Markets are pricing in a roughly 82% chance of rates being held steady at the Fed's monetary-policy meeting later this month, according to the CME FedWatch tool, up from 70% last week. But traders still see essentially no chance that Warsh will convince the rest of the Federal Open Market Committee to cut rates, even should he favor it himself.
At least for now, Trump looks ready to acknowledge that reality.
"[Warsh]'s got a board that maybe is a little bit hostile, and you know, unfortunately, and maybe a board that wants to do the wrong thing," Trump said in an interview with CNBC on Thursday. "He's a great guy and a great pro, and I know where he'd like to be, but he has to do what he has to do."
Trump said in the same interview he would continue efforts to remove Lisa Cook from the Federal Reserve Board of Governors, after the Supreme Court ruled this week that she could remain in her role as her legal case challenging the termination moves forward.
The continuing legal wrangles might mean the market is hesitant to price in significant Fed policy changes. Warsh's plan to establish task forces to review Fed communications, the balance sheet, economic data usage, productivity and jobs, and inflation frameworks might also muddy the waters.
"We believe the Fed will keep rates steady in the near term and see scope for markets to scale back their expectations for Fed tightening," wrote Mark Haefele, chief investment officer at UBS Global Wealth Management in a research note on Friday. "This should benefit short- to medium-maturity quality bonds as yields fall, and we see current elevated yields as an opportunity for investors to lock in durable portfolio income."
Write to Adam Clark at adam.clark@barrons.com
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(END) Dow Jones Newswires
July 03, 2026 12:00 ET (16:00 GMT)
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