Just days after the Senate narrowly confirmed Kevin Warsh as the next chair of the Federal Reserve, the inflation picture took a sharp turn for the worse.
Consumer prices rose 3.8% in April, the highest annual rate since May 2023
And wholesale prices — often viewed as an early warning system for what consumers will eventually pay — climbed 6%, the biggest 12-month increase since December 2022. The yield on the benchmark 10-year Treasury note, meanwhile, has pushed up to roughly 4.6% as of this writing, a one-year high. It’s a difficult inheritance.
Warsh, who won confirmation on a 54-45 vote last Wednesday and is set to be sworn in Friday, isn’t taking over the rate-setting committee just to manage routine policy decisions. He’ll have to navigate the first real inflation scare since the post-pandemic surge, and he’ll have to do so while navigating a White House that has openly demanded lower interest rates, even as Trump said this week he would let Warsh act independently on rates. What investors might expect from a Warsh-led Fed — and how rate-sensitive corners of the market could behave in the meantime — comes down to two facts: prices are accelerating, and the new chair reportedly has historically cared more about inflation than the typical policymaker.