Warsh Takes Fed Helm as April PCE Nears 3.9% and December Rate-Hike Odds Hit 40%
Updated
Updated · CBS New York · May 26
Warsh Takes Fed Helm as April PCE Nears 3.9% and December Rate-Hike Odds Hit 40%
3 articles · Updated · CBS New York · May 26
April PCE inflation is expected at 3.9% on Thursday—the highest in nearly three years—handing new Fed Chair Kevin Warsh an immediate test as oil-driven gasoline prices keep price pressures elevated.
That backdrop is pushing rate cuts further out: some Wall Street economists now see no cuts through 2026, and CME FedWatch shows a 40% chance of a December hike versus 3% for June.
Warsh must navigate competing pressures from President Trump, who had pushed for lower rates, and from policymakers likely to prioritize inflation if it stays well above the Fed’s 2% target.
At the same time, Warsh has promised a “reform-oriented” Fed, criticizing the central bank’s economic projections while insisting monetary policy will remain strictly independent of political influence.
With inflation soaring, can the new Fed chair deliver the lower interest rates the White House wants?
Could the Fed solve the inflation crisis by simply changing how it is measured?
Can artificial intelligence truly tame the runaway inflation being fueled by war and high oil prices?
Inflation, Interest Rates, and the Warsh Fed: Navigating Persistent Price Pressures and Policy Divides in 2026
Overview
Kevin Warsh’s appointment as Federal Reserve chairman in May 2026 marked a major leadership shift, following President Trump’s criticism of Jerome Powell and calls for sharply lower interest rates. Warsh’s arrival comes amid five years of high inflation and supply shocks, with his policy influence limited as only one of twelve voting members. The economic landscape is shaped by persistent inflation, policy uncertainty, and external pressures like geopolitical conflicts. Warsh faces the challenge of balancing inflation control with economic growth, as the Fed’s ultimate direction depends on both internal committee dynamics and evolving global risks.