The number of traders expecting an interest rate cut at the March Federal Open Market Committee (FOMC) meeting rose to 23%, following investors’ fears of a hawkish stance from Kevin Warsh, US President Donald Trump’s nominee for Federal Reserve chairman.
Investors and traders expecting interest rates to fall jumped nearly 5% from Friday, when only 18.4% indicated they expected interest rates to fall, according to data from the Chicago Mercantile Exchange (CME) group.
Those expecting a rate cut in March are forecasting a 25 basis point (BPS) cut, with no investors expecting a rate cut of 50 BPS or more.
Interest rate target probabilities for the March 2026 FOMC meeting. Source: CME Group
President Trump nominated Warsh in January to replace Federal Reserve Chairman Jerome Powell, whose term ends in May.
Interest rate policy can influence crypto asset prices, with easing liquidity conditions seen as a positive price catalyst, and tightening liquidity conditions through higher rates negatively impacting asset prices, as access to funding dries up.
Related: The next Bitcoin bull market may not come from “more accommodating policies”
Markets and investors spooked by Warsh’s appointment
“The appointment of Kevin Warsh as the next Fed chairman has shaken the markets to their core,” crypto market analyst Nic Puckrin said in a post shared with Cointelegraph.
Puckrin attributed the sharp decline in precious metals toward late January and early February to investor perceptions of Warsh, which is seen as more hawkish, meaning he favors keeping interest rates higher for longer. He said:
“Markets are digesting Warsh’s views on future Fed policy, including the central bank’s balance sheet, which he says is “billions larger than it should be.” If he adopts policies aimed at shrinking the balance sheet, markets will face a lower liquidity environment.”
Thomas Perfumo, global economist at cryptocurrency exchange Kraken, told Cointelegraph that Warsh’s appointment sends a “mixed” macroeconomic signal to investors.
Warsh’s appointment could signal that liquidity and credit will stabilize in the United States, rather than expand, as crypto investors had expected, Perfumo said.
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