The Federal Reserve left interest rates unchanged at 3.5% to 3.75% on June 16, as everyone expected — the decision had a 97% probability priced in. But the real story is what the Fed's dot plot revealed: the last remaining projection for a rate cut in 2026 is gone. Futures traders now see a 66% chance of at least one hike before December, a sharp reversal from the one to two cuts markets were pricing at the start of the year.
Warsh's first meeting
Kevin Warsh chaired his first Federal Open Market Committee meeting on June 16. He didn't submit a dot in the Summary of Economic Projections, making him the first Fed chair in 14 years to withhold his own rate outlook. In his debut press conference, Warsh signaled a leaner Fed — less forward guidance, inflation-first framing. Raymond James analysts had predicted at least three voting members would project a hike before December, and the dot plot confirmed that shift.
The dot plot flip
Markets entered 2026 expecting the Fed to cut once or twice by December. That bet has fully reversed. The 10-year Treasury yield now sits near 4.47%, the 30-year near 4.97%. Higher borrowing costs are a headwind for crypto — Bitcoin and the broader market track global liquidity expectations. The ECB moving toward tightening adds another layer of pressure on risk assets globally.
The timing isn't great. Crypto markets had been pricing in a looser monetary environment by year-end, and the dot plot yanked that off the table. With the Fed now leaning toward a hike, speculative assets face a tougher macro backdrop. No one's calling for a crash, but the liquidity tailwind that buoyed markets earlier in 2026 is fading fast.
The next concrete thing to watch is the Fed's language at the July meeting. If the data keeps running hot, a hike in September or December becomes a real possibility. And with the ECB tightening, global liquidity is tightening from both sides of the Atlantic.
