--- title: "The Biggest Suspense at Next Week's Federal Reserve Meeting: Will Walsh Bow to Trump or Lean Toward Rate Hikes?" type: "News" locale: "en" url: "https://longbridge.com/en/news/289010830.md" description: "New Federal Reserve Chair Walsh is set to preside over his first monetary policy meeting, with three key signals potentially revealing a policy shift: removing the \"dovish bias\" wording, the appearance of rate hike expectations in the Dot Plot, and rising weight on inflation risks. Can this new chair, who once strongly advocated for interest rate cuts, carve out an independent path between hawkish consensus and White House pressure? Analysts warn that the first rate hike since 2023 could occur as early as this summer" datetime: "2026-06-08T07:23:05.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/289010830.md) - [en](https://longbridge.com/en/news/289010830.md) - [zh-HK](https://longbridge.com/zh-HK/news/289010830.md) --- # The Biggest Suspense at Next Week's Federal Reserve Meeting: Will Walsh Bow to Trump or Lean Toward Rate Hikes? Federal Reserve Chair Kevin Walsh is about to preside over his first monetary policy meeting since taking office. The core question for the market is: Facing an increasingly unified hawkish atmosphere within the Fed, can this new chair, who has publicly advocated for interest rate cuts, chart his own policy course between inflationary pressures and White House preferences? The Federal Reserve will hold its interest rate meeting from June 16 to 17. While rates are expected to remain unchanged, the policy signals from this meeting are significant. Over the past eight weeks, Fed officials' concerns about rising inflation have converged. The strong May employment report released on Friday further supported this stance. Economists point out that the surge in energy prices triggered by the Iran conflict is impacting inflation more than growth, reshaping the Fed's policy trade-offs. Michael Gapen, Chief U.S. Economist at Morgan Stanley, stated, "**One of the key outcomes of the meeting will be to see how closely Walsh aligns with hawkish views.**" Analysts will focus on three dimensions: whether the policy statement removes the "dovish bias" wording, whether the Dot Plot shows expectations for rate hikes, and whether the risk distribution chart tilts toward inflation. If these signals appear simultaneously, it will mark a major shift in the Federal Reserve's easing cycle since late summer 2024. Fed officials have currently entered the blackout period and are not allowed to make public statements before the meeting. After the statement is released on June 17, Walsh will host his first press conference since taking office. The market also expects him to send clear signals regarding reforms to communication mechanisms—one of his core promises during his campaign for Fed Chair. ## Three Key Rate Hike Signals: How the Meeting Paves the Way for a Policy Shift Economists have listed three key indicators to judge whether the Fed is creating conditions for a rate hike. **Removing the "dovish bias" is the most watched signal among them.** This wording was added to the policy statement last December, when the Fed had just completed three consecutive rate cuts, bringing the benchmark interest rate range down to 3.5% to 3.75%. In an interview, former Cleveland Fed President Loretta Mester stated that retaining this wording was a "gift" for Walsh, and removing it is a "quite straightforward and relatively painless" way to signal to the market that Walsh will base policy on economic data, while also helping him dispel the market impression that he "only caters to Trump's preference for rate cuts." "I think there are still concerns outside that he might be inclined to lower interest rates simply due to the government's wishes," Mester said. **The shift in the Dot Plot is the second dimension to observe.** Matthew Luzzetti, Chief U.S. Economist at Deutsche Bank, stated that the new Dot Plot may show more officials expecting rate hikes rather than cuts, forming a sharp contrast with March of this year—when no one marked expectations for rate hikes, only 7 out of 19 officials expected one rate cut this year, 7 leaned toward holding steady, and another 5 expected two or more rate cuts. **Changes in the risk distribution chart are the third dimension.** Michael Gapen pointed out that the Fed's risk chart may show a sharp rise in concerns about upside inflation risks, while worries about the labor market recede, providing a theoretical basis for a policy shift toward rate hikes. Mester stated that the likelihood of the Fed raising rates this year is quite high, possibly as early as late summer, which would be the first rate hike since July 2023. She noted that rate hikes would help curb overheated demand driven jointly by energy bottlenecks caused by the Iran war and strong corporate AI spending. ## Communication Reform: Breaking with the Past or Gradual Progress Walsh previously promised to implement "policy regime changes" and criticized Fed officials for being too eager to make public comments. The market expects him to showcase his reform vision at his first press conference, but analysts have differing views on the extent of the changes. Ellen Meade, Associate Professor of Economics at Duke University, believes that Walsh will signal the Fed's entry into a "new era" at his first press conference. "He wants to show that he intends to break with convention upon entering, and communication is an area where he can relatively quickly advance change," she said. Possible measures include: not submitting personal economic forecasts (i.e., not participating in the compilation of the Dot Plot), and significantly compressing the duration of press conferences from the approximately 45 minutes common during former Chair Powell's tenure. Mester holds a more cautious judgment. She believes Walsh will not rush to make a "grand spectacle," but will prioritize building mutual trust with colleagues and the public. She expects Walsh may use the first press conference to announce the establishment of several special committees to begin advancing his two priority agendas: shrinking the balance sheet and restructuring the Fed's market communication mechanisms. "He is an excellent communicator and fully capable of handling this job," Mester stated. ### Related Stocks - [MS.US](https://longbridge.com/en/quote/MS.US.md) - [DBK.DE](https://longbridge.com/en/quote/DBK.DE.md) - [DB.US](https://longbridge.com/en/quote/DB.US.md) - [MS-O.US](https://longbridge.com/en/quote/MS-O.US.md) - [MS-Q.US](https://longbridge.com/en/quote/MS-Q.US.md) - [MS-E.US](https://longbridge.com/en/quote/MS-E.US.md) - [MS-I.US](https://longbridge.com/en/quote/MS-I.US.md) - [MS-L.US](https://longbridge.com/en/quote/MS-L.US.md) - [MS-P.US](https://longbridge.com/en/quote/MS-P.US.md) - [MS-A.US](https://longbridge.com/en/quote/MS-A.US.md) - [MS-F.US](https://longbridge.com/en/quote/MS-F.US.md) - [MS-K.US](https://longbridge.com/en/quote/MS-K.US.md) - [03KB.DE](https://longbridge.com/en/quote/03KB.DE.md) - [DPB.DE](https://longbridge.com/en/quote/DPB.DE.md) ## Related News & Research - [This Investment Has a 100% Success Record of Surviving Recessions. 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