The new Federal Reserve Chair Powell immediately faces a dual challenge: soaring inflation + pressure from Trump to cut rates


On May 17, FOX reporters disclosed that the new Fed Chair Kevin Warsh is facing a dual challenge as soon as he takes office: inflation rising to an annualized 3.8% (the highest since May 2023) and pressure from Trump to cut rates.
The Iran war has pushed energy prices higher, wholesale price increases outpace consumer prices, and rate hike expectations have returned this year.
Warsh himself is a firm inflation hawk, but his room to cut rates is extremely limited, and former Fed Chair Powell still holds voting rights within the Fed, so decision-making is no longer unified.
Why it matters: The Fed's policy shift expectations are reshaping global liquidity expectations, with the US 10-year Treasury yield soaring to a one-year high of 4.53%, and risk assets are under short-term pressure.
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