Kevin Warsh walks into his first meeting as Federal Reserve chairman this week in an awkward spot. He argued last year for interest-rate cuts and was chosen to deliver them. But the conversation at the Fed has shifted the other way—toward raising rates, not cutting them.
When President Trump picked Warsh in January, the Fed looked headed for lower rates—and the cheaper mortgages and loans that come with them. Investors expected several cuts this year, on top of three in late 2025, thanks in part to a wobbly job market that left officials worried that high rates were doing more harm than good. Inflation, meanwhile, looked like it might resume a decline toward the Fed’s 2% goal once the effects of tariffs faded.
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