Trump Eases Pressure On Fed Chair Kevin Warsh As Inflation Climbs, Analysis Claims

With inflation well above the Federal Reserve’s target, largely as a result of the spike in oil prices due to the war in Iran, President Donald Trump’s administration has eased its public pressure on newly installed Fed Chair Kevin Warsh, signaling greater patience after the central bank held interest rates steady.

The shift in tone comes after the Bureau of Economic Analysis reported Thursday that the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation measure, rose 4.1% in May from a year earlier. Core PCE inflation, which excludes volatile food and energy prices, increased 3.4%, underscoring persistent price pressures despite easing fuel costs in recent days.

Warsh and the Federal Open Market Committee voted last week to leave interest rates unchanged, while removing earlier guidance that had suggested a bias toward future rate cuts. The updated projections showed nearly half of Fed policymakers now expect at least one rate increase before the end of the year.

President Trump, however, continued to argue last week that borrowing costs should be lower.

“We need low interest rates. Low interest rates will solve everything, will solve that now,” Trump said last Wednesday during an Oval Office event.

Behind the scenes, however, White House officials are taking a more measured approach toward the new Fed chair than they did with his predecessor, Jerome Powell.

Speaking to CNBC, a White House official said the administration’s assessment of the economic data has not changed, but Trump’s confidence in Warsh has altered the administration’s public messaging.

“I wouldn’t say it’s necessarily a shift in policy, or how we’re seeing the data,” the official told the network. “Personnel is big for this president.” The official added that Trump has “confidence and faith” in Warsh and is allowing him greater latitude in making monetary policy decisions.

The official also said there was “no daylight” between Trump and his economic advisers, describing the president’s current position as “a lot more nuanced” than simply demanding immediate rate cuts following both Operation Epic Fury and Warsh’s appointment.

Several senior administration officials have also moderated their public comments on interest rates.

White House trade adviser Peter Navarro argued last Thursday that the latest inflation report supports a “hold-steady case” for the Fed. Navarro said raising rates now would be “foolish,” while maintaining that rates would have been lower had the Fed acted differently over the past year.

Treasury Secretary Scott Bessent likewise avoided directly calling for lower rates during appearances this week. Bessent said Warsh “will be independent and do what he wants” while urging observers to “keep an open mind” until inflation data reflects conditions after the recent Middle East conflict.

Kevin Hassett, director of the White House National Economic Council, also defended Warsh’s cautious approach.

“The first meeting, you want to kind of get your feet on the ground and hold steady,” Hassett said last Tuesday.

Warsh emphasized inflation control after the Fed’s June policy meeting.

“The Fed will deliver price stability,” he said while explaining the committee’s decision to leave rates unchanged.

Most economists continue to expect the Federal Reserve to leave interest rates unchanged for the remainder of the year despite markets increasingly pricing in the possibility of future increases following the stronger inflation data. Reuters reported that economists believe easing oil prices and geopolitical uncertainty justify maintaining the current policy stance even with inflation running above target.

Federal Reserve Bank of New York President John Williams also said last week that inflation remains too high and current monetary policy is appropriately positioned to bring price pressures lower over time, according to Reuters. Williams reiterated that restoring inflation to the Fed’s 2% objective remains the central bank’s priority.

The latest inflation figures followed months of heightened volatility in global energy markets after fighting in the Middle East disrupted oil supplies through the Strait of Hormuz. Energy prices have eased since an agreement reopened the critical shipping route, helping gasoline prices retreat from recent highs.

According to AAA, the U.S. average gasoline price stood at $3.90 per gallon on Friday, down 58 cents from a month earlier. However, uncertainty remains after reports that Iranian forces attacked a cargo vessel in the Strait of Hormuz on Thursday.

White House spokesman Kush Desai defended the administration’s position in comments to CNBC.

“President Trump and administration officials have all consistently said the same thing: everyone has confidence in Chairman Kevin Warsh and, despite temporary disruptions to energy markets, the Trump administration’s supply-side policies are cooling inflation to pave the way for interest rate cuts,” Desai said.

Warsh became Federal Reserve chair in May after replacing Jerome Powell, ending years of public clashes between Trump and Powell over monetary policy. Since taking office, Warsh has stressed the Fed’s commitment to restoring price stability while avoiding detailed guidance about the future path of interest rates, a departure from the central bank’s previous communication strategy.