When President Trump tapped Kevin M. Warsh in January to become the next chair of the Federal Reserve, the policy debate centered on when, not whether, interest rates would fall.
Four months later, the economic challenges Mr. Warsh inherits after being sworn in on Friday have all but eviscerated expectations of any immediate decrease in borrowing costs.
Inflation is rising again, and the war with Iran has raised concerns that surging commodity prices could broaden out and morph into a more persistent problem. Officials at the central bank have begun to embrace the possibility that rates may need to rise to get inflation back to their 2 percent target, a reality that has rattled global bond markets and sent yields on U.S. government debt soaring.
Higher rates are far from what Mr. Trump wanted from Mr. Warsh. The president had long stipulated that whomever he chose to replace Jerome H. Powell — who faced such aggressive attacks from Mr. Trump that he decided to stay on as a Fed governor after his term as chair ended to safeguard the institution — agreed with him about the need for lower borrowing costs.
But even Mr. Trump now appears cognizant of the tough task ahead for Mr. Warsh. Days before his swearing-in, which was held at the White House for the first time in roughly 40 years, the president said he would let him “do what he wants to do” on rates.
At Friday’s ceremony, Mr. Trump emphasized that he wanted Mr. Warsh to be “totally independent,” a nod to concerns about the president’s own unrelenting pressure campaign against the Fed for lower rates.
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