Rate-Hike Odds Rise After Fed’s Warsh Speaks

Financial markets shifted on Tuesday as investors raised their bets on a near-term interest rate increase following public remarks by Federal Reserve Governor Kevin Warsh. Speaking at a policy forum in Washington, Warsh signaled that stubborn inflation and resilient labor data could justify tighter monetary conditions sooner than previously expected. Traders now price in a roughly 65% chance of a quarter-point hike at the next Federal Open Market Committee meeting, up from 45% a week ago. The shift came after Warsh noted that “the current path of disinflation has stalled” and that the central bank must remain “vigilant against embedded price pressures.” In a separate development, Defense Secretary nominee Pete Hegseth is weighing a second all-hands military address, according to two defense officials familiar with the discussions. The proposed message would focus on readiness and morale, following a similar department-wide briefing earlier this year. No date has been set, and the plan is still under review. Meanwhile, in a modest experiment with direct democracy, residents in several Russian municipalities voted this week on local budget allocations—a rare, limited exercise in citizen decision-making. The ballots were non-binding, and analysts note the move is largely symbolic, with no changes to federal governance structures. The combination of a hawkish Fed signal, a potential military communications push, and a small democratic gesture in Russia underscores a week of quiet but consequential policy shifts across three fronts.