Kevin Warsh calls for regime change at Fed, eyes rate cuts

Kevin Warsh, nominated to be the next Federal Reserve chair, has called for a “regime change” at the central bank, pushing for a shift toward rate cuts. The probability of a 25 bps rate cut after the April 2026 meeting is at 0.2% YES, up from 0% yesterday.

Warsh’s advocacy for a more supply-side-oriented policy and his criticism of the Fed’s current approach caught traders’ attention. The 25 bps cut market saw a slight uptick in odds, though still far from meaningful. The 50+ bps cut market is unchanged at 0.1% YES.

The market reaction is tepid, consistent with skepticism about Warsh’s ability to implement his agenda given the Fed’s institutional constraints. Combined trading volume shows face value at $2.28M, but actual USDC traded was a modest $5,055. It takes $5,326 to move the 25 bps market 5 points, a sign of thin interest unless new developments appear.

The odds remain low because the Fed’s institutional norms make rapid policy shifts unlikely regardless of who chairs it. A YES share at 0.2¢ pays $1 if the rate cut happens, a 500x return. Traders would need to believe in a major policy shift to bet here.

Watch for Warsh’s Senate confirmation hearings and any signals from Powell or FOMC members. If Warsh gains traction or shifts the Fed’s internal debate, these markets will move.

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