Fed meeting – Will Warsh grant Trump's wishes?
President Trump has appointed Kevin Warsh as Fed chair to push through rapid interest rate cuts.
Commerzbank Economic Research
06/12/2026
Warsh takes over from Powell ...
The U.S. Federal Reserve has had a new chairman since May 22: Kevin Warsh has replaced Jerome Powell as chairman of the Federal Reserve Board. He will chair his first monetary policy meeting next week and hold his first press conference afterward.
Warsh was nominated by President Trump because the latter was dissatisfied with his predecessor’s policies. This is because Powell had refused to lower interest rates despite massive pressure. Market participants will be looking to Warsh’s first major appearance for clues as to the extent to which he will change the Fed’s course. Although Trump recently said in a television interview that Warsh could do whatever he wanted and that he did not want to exert much influence over him, Trump nevertheless made it clear that there was no reason to raise interest rates. In an earlier interview, Trump admitted that he would not have selected Warsh if the latter had told him that he intended to raise interest rates.
... but for now there is no majority in favor of interest rate cuts, ...
However, an interest rate cut is unlikely to be seriously on the table next week. This is because inflation risks have continued to rise since the last meeting in April. Based on the comprehensive inflation measure preferred by the Federal Reserve—the deflator of personal consumption expenditures (PCE) —prices in April were 3.8% higher than a year earlier. The core rate, excluding energy and food, stood at 3.3%. Since most of the data used to calculate the PCE deflator for May is already available, a further increase to 4.1% (headline rate) and 3.4% (core rate) is foreseeable. So far, the war in Iran has mainly manifested itself in higher gasoline prices, while second-round effects on other goods and services—such as those resulting from higher transportation costs—have remained limited. However, without a prompt end to the conflict in the Persian Gulf and the resulting decline in energy prices, this is likely to change in the coming months.
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