Warsh Sworn In as Fed Chair Amid Inflation, Trump Pressure
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- Kevin Warsh is set to be sworn in by President Trump on Friday as the next Fed chair, taking over as annual inflation hit 3.8% in April — its highest level in three years — and producer prices rose at their fastest pace in nearly three years.
- Trump publicly told reporters Warsh would be "allowed to do what he wants to do," but in December described his Fed pick as "someone who believes in lower interest rates, by a lot" and said in April he would be "disappointed" if the Fed did not cut rates immediately upon Warsh taking office.
- Warsh insisted the president did not ask him to commit to rate cuts and pledged to make decisions based on the state of the economy, suggesting much of the Iran-driven inflation surge comes from temporary fuel and food costs that would reverse once the conflict eases.
- The Iran war, which the article says broke out in February, has complicated the rate-cut path by keeping energy and food prices elevated, with no end to the conflict in sight.
- Trump's immigration cuts and deportations have removed more than 600,000 people from the U.S. labor force over the past year, according to Labor Department data, even as job gains have flattened since Trump took office in January 2025.
- Christian Floro, market strategist at Principal Asset Management, warned that hotter-than-expected inflation reports raise the risk investors won't see further Fed policy easing until 2027.
Why it matters: Warsh inherits a Fed where the president who appointed him is publicly demanding immediate rate cuts, yet the war Trump launched has driven inflation to a three-year high and pushed producer prices up fastest in nearly three years. The clash means the White House's chosen rate-cutter may be boxed into holding or even raising rates, delaying the mortgage, auto-loan, and corporate-borrowing relief Trump promised voters.
