US EditionEconomic Conditions May Delay Interest Rate Cuts Under Prospective Fed Chair Warsh
Wall Street expects an extended hold as inflation rises and most Fed policymakers signal they are not ready to cut rates.
- At his Senate nomination hearing on Tuesday, Kevin Warsh pledged independence from White House pressure but offered few specifics on interest-rate policy. President Donald Trump nominated Warsh to succeed Federal Reserve Chair Jerome Powell, whose term ends May 15.
- Inflation spiked to a two-year high of 3.3% in March after the Iran war disrupted oil exports, complicating the Federal Reserve's path to lower rates. This supply shock pushed energy prices higher.
- As one of 12 voting members on the Federal Open Market Committee, Warsh faces hurdles including his historically hawkish record and desire to shrink the central bank's $6.7 trillion balance sheet. Analysts suggest his approach favors extended holds over rate cuts.
- While President Trump insisted that "when Kevin gets in, I do … interest rates should be much lower," Wall Street investors currently see little chance for a rate cut until October 2027. This divergence signals tension between political expectations and economic data.
- Economists warn that Warsh's stated outlook is much more consistent with an extended hold than additional cuts, potentially setting him on a collision course with market participants. His influence remains uncertain as he balances economic data against persistent political pressure for easing.
37 Articles
37 Articles
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The Federal Reserve's Interest Rate Dilemma Is About to Go From Bad to Warsh -- and the Stock Market May End Up Paying the Price
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Associated Press News
Don't count on rate cuts just yet: Warsh as Fed chair may not lead to big policy changes
President Donald Trump has made it clear he expects his choice for Federal Reserve chair to quickly cut interest rates once he takes office.
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