When President Donald Trump helped push out Federal Reserve Chairman Jerome Powell, he was looking to replace him with someone who would lower interest rates and help prop up stock prices. However, the person he appointed to replace Powell appears to have a vastly different idea.

Instead of cutting rates as Fed chief at his first meeting, new Fed chairman Kevin Warsh kept rates steady while issuing a terse statement that ended with: “The Committee will deliver price stability.” The implication of his message was clear: Not only are rate cuts off the table, but interest rate hikes are also more likely in the future.

This was also confirmed by the Fed Dot Plot, a quarterly graph that tracks where each Fed member predicts future interest rates are headed. The graph showed that the vast majority of members predicted rates to be steady or higher this year, with about half expecting at least one rate increase and a third expecting two or more hikes.

Warsh also indicated that the Fed will be less communicative and take a less active role in the stock market. At the Federal Open Market Committee’s (FOMC’s) June 17 meeting press conference, he said: “So I think financial markets perform best when they react to incoming data. I think the financial markets work less efficiently when they ask a question: ‘How will the Federal Reserve react to that incoming information?'”

Warsh is looking to remake the Fed, and one thing he has made clear is that the Fed is not there to bail out Wall Street or help prop up stock prices. How this will play out will be interesting, and certainly goes in the opposite direction of the man who just appointed him to the position.

What should investors do?

Fed rate cuts have generally been good for stocks, with the market typically generating positive returns over the year following an initial rate cut. This isn’t the case every time, and it doesn’t always save stocks from falling into a bear market, but it generally helps them bounce back unless it is due to a severe recession, as we saw in 2008 with the housing bubble.

With the “Fed Put” off the table, the typical magnitude and duration of bear markets could change, as they have tended to be shorter in recent times. It isn’t necessarily a bad thing to let the market sort things out for itself rather than being propped up by cheap money, but it is a change investors and executives will have to get used to moving forward.

My advice is not to shift strategies in response to these Fed changes. Most investors are best served by dollar-cost averaging into a core index exchange-traded fund (ETF) or two, like the Vanguard S&P 500 ETF (VOO +0.45%) or the Invesco QQQ Trust (QQQ +0.31%), over a long period of time. This is what ultimately will help create long-term wealth.

ETFs that track market-cap-weighted indexes benefit from a “survival of the fittest” dynamic, with successful companies naturally becoming larger portions of the index while weaker ones shrink or eventually exit. A less accommodative Fed would only reinforce this, making index ETFs even more attractive investments.

Iran insists that all traffic must receive its OK and has attacked ships attempting to cross the narrow waterway outside its approved route along the Iranian coast. On Saturday, it declared the strait closed again and claimed to hit a ship using an “unauthorized route.”

The U.S. has retaliated by bombing Iranian sites used for drone and missile strikes, doing so again on Saturday, while defending ships following an alternate route that hugs the Omani coast.

“Iran was provided yet another opportunity to demonstrate adherence to the Memorandum of Understanding after being held accountable for earlier attacks on commercial vessels but has again failed,” U.S. Central Command said on X. “In response, the United States is imposing a heavy cost by continuing to degrade Iran’s ability to attack civilian mariners and commercial ships freely transiting the strait.”

Top U.S. officials have demanded that Tehran make a public statement saying the strait is open and ships won’t be attacked. But the ability to close it off—and threaten the global economy with an oil shock—represents Iran’s main source of leverage.

Weeks of U.S. bombardment during the war failed to fully reopen the strait, though the Navy established the alternate channel by guiding ships through and offering protection from Iranian attacks.

The result has been a stalemate in recent weeks as the U.S. refuses to back down from trying to restore free navigation while Iran won’t budge on asserting its authority.

The solution could echo the famous Old Testament story where Solomon orders a baby claimed by two women to be cut in half.

Oman has drafted a proposal to manage traffic in the strait through two separately controlled routes, sources told CNN on Saturday.

The plan has yet to be finalized, but it calls for free navigation under prewar conditions in the southern corridor through Omani territorial waters.

The northern corridor through Iranian waters would require prior approval from Tehran, although no tolls would be imposed, the report said.

Oman’s foreign ministry didn’t immediately respond to a request for comment.

Iran’s foreign minister met with his Omani counterpart in Muscat on Saturday to discuss ways for ensuring safe passage in the strait.

Oman said it and Iran agreed to keep talking about the Strait of Hormuz “at the technical and political levels.”

Of course, no corridor can truly be open until shipping companies and their insurers deem it safe enough to transit, regardless of official pronouncements from the U.S. or Iran.

Defending the Omani route from Iran has been the U.S. military’s responsibility, giving it effective control over it, though some attacks have still gotten through.

But even if the U.S. is able to intercept all of Iran’s drones and missiles, enough ships still have to get in and out to both load and deliver the Persian Gulf’s oil supplies. Until then, oil markets will remain under pressure, forcing consuming countries to keep draining their reserves.

The current status quo under the fragile ceasefire may be unsustainable. The U.S. and Iran have signaled reluctance to return to all-out war, but more skirmishes are possible.

Dan Alamariu, chief geopolitical strategist at Alpine Macro, said in a note on Wednesday that the U.S. could try to pry open the strait by military force, adding that current military operations suggest the U.S. may be positioning for this option.

Another course of action is to “grind Iran down economically” by reimposing a naval blockade, which he called the “path of least resistance” unless the memorandum of understanding that was signed last month is reaffirmed.

Alamariu predicted a new deal may be needed. But along the way, more fighting, a blockade, or both are possible.

“Ultimately, both sides need a deal soon given domestic vulnerabilities: looming U.S. midterms, Iran’s economic and political fragilities,” he explained. “Some new deal is therefore quite possible, even likely within 1-2 months (or sooner), though timing and escalatory paths remain very uncertain. The current strikes and counter-strikes are a way to bargain, as both the U.S. and Iran are trying to establish greater leverage.”