Kevin Warsh, sworn in as Federal Reserve Chair on May 22, 2026, is about to face his first real test. His inaugural FOMC meeting, scheduled for June 16-17, will culminate in a press conference where markets expect him to lay out a coherent inflation-fighting strategy that departs sharply from the Powell era.

A new sheriff with old-school instincts

Warsh is no stranger to the Fed. He served as a Governor from 2006 to 2011, a stretch that included the global financial crisis and its messy aftermath. During that tenure, he built a reputation as one of the more hawkish voices in the room, consistently flagging inflation risks even when others were focused on keeping the economy from collapsing.

Warsh has been vocal about viewing inflation not as some abstract economic byproduct but as a deliberate policy choice. In his framework, the Fed doesn’t passively observe inflation. It actively controls it.

The previous regime under Jerome Powell embraced “flexible average inflation targeting,” adopted in 2020, which essentially gave the Fed permission to let inflation run above 2% for extended periods to make up for past shortfalls. Warsh has openly criticized that approach. His preferred alternative: a strict 2% inflation target with no tolerance for overshooting.

Measuring inflation differently

Beyond the target itself, Warsh wants to change how the Fed actually measures inflation. He has expressed interest in using trimmed mean or median calculations rather than the core Personal Consumption Expenditures index, which has been the Fed’s preferred gauge for years.

Core PCE strips out food and energy prices to reduce noise. Trimmed mean and median approaches take a different tack, removing the most extreme price changes on both ends of the spectrum. The inflation measure the Fed prioritizes directly influences when and how aggressively it adjusts interest rates.

With CPI inflation currently running around 3.3%, well above the 2% target, the choice of framework will shape whether the Fed sees itself as nearly done fighting inflation or still deep in the trenches.

What to expect from the June meeting

Markets are currently projecting that interest rates will hold steady in the 3.50%-3.75% range following the June meeting. Analysts want to hear Warsh’s “theory of change” — how exactly he plans to get inflation from 3.3% down to 2% without cratering the economy.

There has been speculation that Warsh could embrace AI-driven productivity enhancements as a structural force that brings prices down over time. On the balance sheet front, the Fed currently holds approximately $6.71 trillion in assets. Warsh has signaled he wants to reduce this gradually while keeping interest rates as the primary policy lever, stepping back from reliance on unconventional monetary tools more broadly.

What this means for crypto investors

Warsh opposes the implementation of a central bank digital currency, which positions him against the trend seen in other major economies exploring or launching CBDCs. For the crypto industry, the absence of a US CBDC removes one potential competitive threat to private stablecoins and decentralized alternatives.

A hawkish Fed chair who’s serious about crushing inflation to exactly 2% creates a monetary environment where liquidity tightens and risk appetite shrinks. Bitcoin and the broader crypto market have historically been sensitive to Fed policy signals, rallying when money is cheap and stumbling when it’s not.

If Warsh signals at the June press conference that he’s prepared to raise rates further or hold them higher for longer than markets expect, the resulting volatility won’t stay contained to Treasury yields. Conversely, if his supply-side optimism about AI and productivity gains sounds credible, it could open the door to a scenario where rates eventually come down without the Fed needing to see economic weakness first.