Warsh Rejects Fed's Current Inflation Theory, Soaring Oil Prices May Not Halt Rate Cuts

Odaily News The US-Iran-Israel conflict has triggered a surge in oil prices, raising market concerns about a resurgence of inflation. This has prompted Federal Reserve officials to consider pausing the recent rate-cutting cycle, and even leaves open the possibility of rate hikes. However, this is the current stance of the Fed, and the central bank may soon welcome a new leader with a completely different view on inflation.

CNBC points out that if Kevin Warsh is confirmed by the Senate, he would almost certainly support rate cuts even in the face of a significant rise in oil prices. Warsh is President Trump's nominee for the next Fed Chair, set to succeed Powell whose term ends on May 15th. On Wednesday, Trump formally submitted Warsh's nomination to the Senate. Prior to the nomination, Warsh stated that he believes interest rates should be lower than the current federal funds rate range of 3.5% to 3.75%; Trump also explicitly stated that he chose Warsh because they share a desire to lower interest rates. However, these issues might ultimately remain theoretical. The Trump administration claims to have a plan to curb rising oil prices, and the war may end before Warsh takes office in May or June. (Jin10)