There’s ‘no chance’ Warsh will be able to get the Fed to cut rates, Paul Tudor Jones says

Incoming Federal Reserve Chair Kevin Warsh, according to investor Paul Tudor Jones, may not be looking to cut interest rates but could potentially consider raising them. In a recent CNBC interview on “Squawk Box,” Jones expressed doubt that Warsh would lower rates and suggested that there is a case to be made for hiking them instead.

Warsh has been vocal about his belief that the central bank should be exploring the possibility of lowering interest rates. Currently, the Fed’s benchmark overnight rate is holding steady in a range between 3.5% to 3.75%, where it has remained since December. Despite Warsh’s inclination towards easing, he will be facing a Federal Open Market Committee that recently experienced the most dissents in nearly 34 years. Regional presidents have objected to the language in the post-meeting statement that hinted at potential further rate cuts after the three implemented in the latter part of 2025.

Jones pointed out that with the labor market appearing to have stabilized and inflation remaining above the Fed’s 2% target due to factors like the Iran war and President Donald Trump’s tariffs, there is a case to be made for raising rates. He emphasized the importance of analyzing the data before making any decisions but suggested that Warsh may be constrained before the upcoming election.

Looking ahead, futures traders are currently pricing in a scenario where the Fed maintains its current rates throughout the year. The CME Group’s FedWatch gauge indicates that there are equal chances of either a rate cut or hike, with the likelihood of a hold being the most prominent.

In conclusion, Warsh’s stance on interest rates and the potential for rate hikes under his leadership will be closely watched by investors and policymakers alike. The decision-making process will need to take into account various economic factors and considerations before any definitive actions are taken.