Markets Bet Warsh Holds Rates Steady, But He Won't Say So Himself

Traders are pricing in roughly an 80% chance the Fed holds rates on October 28, yet Kevin Warsh has refused to confirm it, and his September hike already showed he's willing to break with what markets expect.

The Federal Reserve's rate decision lands on October 28 at 2 p.m. ET, and on paper the outcome looks settled. The CME FedWatch Tool has put the odds of another hike at somewhere between 15% and 18% through most of October, according to Bloomberg and Reuters coverage of futures pricing. That's about as close to consensus as Wall Street gets. The catch is that the man running the meeting has made a point of not confirming it.

Kevin Warsh took over as Fed chair in late May 2026, after the Senate confirmed him 54-45 on a near party-line vote, with only Pennsylvania Democrat John Fetterman crossing over to back him. He replaced Jerome Powell, whose term ended two days before Warsh was sworn in. Trump had pushed for Warsh expecting a rate-cutter. Instead, at his very first meeting running the FOMC in June, Warsh held rates between 3.50% and 3.75%, and by September he'd gone further than almost anyone predicted: a 25 basis point hike, unanimous among voting members, taking the target range to 3.75%-4.00%. It was the Fed's first hike since 2023.

That hike is the real reason October is interesting. Warsh told reporters at his September press conference that the increase would support "a timelier return to the Committee's 2 percent goal," and he's kept hammering the same line since. Speaking in August, he said inflation "isn't slowing" and vowed to get it back to target. September's CPI print came in at 3.7% year over year, nearly double the Fed's goal, and Warsh has said plainly that figure alone could justify another move.

Despite that rhetoric, bets on an October hike collapsed over the past few weeks. Odds that sat near 66% in late September fell to under 20% by early October, based on tracking from Kalshi and Polymarket compiled by DeFi Rate. Soft September payrolls data did most of the damage, pushing traders to shift their hike expectations from October to December instead, where the probability of a move now sits around 81%. Bloomberg reported on October 16 that comments from Warsh himself, in which he avoided pre-committing to a direction, actually reinforced the hold bet rather than undercut it: traders read restraint as a signal he's content to wait one more cycle.

Here's the part that should unsettle anyone trading on autopilot. Warsh has openly rejected the convention of forward guidance that governed Powell's Fed for years. At the IMF's October meetings in Bangkok, he made no comments at all on monetary policy or the economic outlook, sticking only to a line about delivering price stability. CNBC's analysis on October 16 put it bluntly: everyone expects a hold, but Warsh could still surprise.

The September meeting proved it: a hike that caught traders flat-footed from a chair who gave little away beforehand.

Fed minutes from that September meeting, released October 7, showed officials projecting one more hike before year-end. That signal matters more for stocks and bonds than the October meeting itself, since the minutes effectively confirmed Warsh's committee isn't done tightening, it's just picking its moment.

For risk assets, the stakes run both ways. A hold on October 28, which is what most traders expect, would likely read as confirmation that December is the real fight, keeping gold and bitcoin range-bound while equities breathe easier short-term. A surprise hike, even a small one, would be the second time in three meetings that Warsh moved against the administration that appointed him expecting rate cuts, and it would force a repricing of every rate-sensitive asset within hours. Gold hit a record $4,381.21 an ounce on October 20 before a sharp pullback, a reminder of how fast these moves can travel once a surprise actually lands.

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