Federal Reserve Chairman Kevin Warsh’s first full week leading the central bank featured unfavorable economic reports that suggest his job is going to be difficult.Warsh, 56, was sworn in as Fed chairman on May 22 during a ceremony at the White House and is facing the tricky task of contending with rising inflation and the prospect that the central bank’s interest rate target might have to remain higher for longer or even be hiked.
The first inflation numbers under Warsh were released Thursday and showed that inflation in the personal consumption expenditures price index rose to 3.8% in April, well above the Fed’s 2% target and much higher than just a few months ago before the war with Iran sent energy prices spiking.
The Bureau of Economic Analysis reported the same day that GDP for the first quarter was revised down 0.4 percentage points to 1.6%.
“It’s a pretty tough situation for an incoming Fed chair,” Jai Kedia, an economist at the Cato Institute, told the Washington Examiner.
Further complicating matters is that President Donald Trump assailed former Fed Chairman Jerome Powell for months over the Fed’s refusal to cut interest rates. With the higher inflation, investors think it is highly unlikely that Warsh can convince the Fed board to lower interest rates this year. In fact, there might even be a rate hike.
