- Expectations are rising for interest rate hikes amid a hawkish posture from the Federal Reserve

On Wednesday, the Federal Open Market Committee kept interest rates unchanged at a range of 3.50% to 3.75%, a move investors had already expected. But what drew sharp attention was the remarks of Federal Reserve Chair Kevin Warsh, in his first press conference after the meeting, where he reaffirmed the 2% inflation target as a “long-term goal” and “primarily driven by monetary policy.”

The press conference made clear that the central bank under Warsh is committed to price stability, which calls for a tighter monetary policy—especially as inflation has risen to its highest level in three years in May due to higher oil and energy prices and geopolitical tensions in the Middle East.

Traders currently see about a 30% chance of a rate hike at the next Federal Reserve meeting, while broader expectations still lean toward a roughly 70% probability of keeping interest rates unchanged. Very few market participants have anticipated the possibility of a rate increase at the start of 2026.

FedWatch Tool | Source: CME Group
Meanwhile, late Wednesday, the White House announced that U.S. President Donald Trump and Iranian President Masoud Pezeshkian had signed a memorandum of understanding aimed at ending the U.S.-Israel conflict with Iran, according to BBC sources. Iranian authorities said they will not return to the pre-war situation and indicated plans to impose transit fees on ships passing through the region after the 60-day fee-exemption period specified in the memorandum of understanding ends.

Investor sentiment in the cryptocurrency market has generally weakened, as reflected by the Fear and Greed Index, which stood at 15 points in the extreme fear zone on Thursday, after being at 22 points the previous day. This suggests investors are taking a cautious stance toward risky assets, and exposure levels are likely to remain low in the near term.
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