Kevin Warsh is poised to take the helm of the US central bank later this week, inheriting an increasingly hawkish crew of central bankers. He enters the role facing pressure from the White House to deliver interest-rate cuts, while the bond market and his colleagues show a growing resolve to stand pat.
Internal concerns about inflation being stoked by the war with Iran intensified last month. Records from the April meeting, the last for outgoing chair Jerome H. Powell, underscored how the conflict has upended the economic outlook. Consequently, a majority of Federal Reserve officials warned that interest rate increases would likely be necessary if the war continues to aggravate inflation or if it remains persistently above the 2% target.
Regarding the operation of the central bank, Warsh has raised eyebrows by implying that the Fed should work closely with Congress and the presidential administration on issues outside of monetary policy.