Market expectations for a March interest rate cut have grown following investor concerns over U.S. President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve Chair. According to CME Group data, the probability traders assign to a cut rose to 23% from 18.4% days earlier. Analysts note Warsh is perceived as a hawk who could tighten liquidity, influencing crypto asset prices.
The probability traders assign to an interest rate cut at the March Federal Open Market Committee meeting has increased. This shift followed investor apprehension over the nomination of Kevin Warsh as Federal Reserve Chair.
According to CME Group data, expectations surged to 23% after being at 18.4% just days before. All forecasts priced a potential 25 basis point cut, not a larger one.
President Trump nominated Warsh in January to replace current Chair Jerome Powell. Interest rate policy influences crypto prices, with easing liquidity seen as positive and tightening as negative.
Crypto market analyst Nic Puckrin stated the nomination has “shaken markets to the core.” He attributed a sharp decline in precious metals to investor perceptions of Warsh’s hawkish stance.
“Markets are digesting Warsh’s views on future Fed policy, most notably the central bank’s balance sheet, which he says is ‘trillions larger than it needs to be’,” Puckrin said. A reduction in the balance sheet would lower market liquidity.
Kraken global economist Thomas Perfumo said the nomination sends a mixed macroeconomic signal. It suggests U.S. liquidity may stabilize rather than expand as some crypto investors had anticipated.
