Overview
- Kevin Warsh was sworn in as Federal Reserve chair on May 22 and said he plans a Greenspan-style role with less forward guidance and fewer communications from Fed officials.
- Bond markets rapidly repriced after recent oil and energy shocks, sending short- and long-term Treasury yields to multi-month highs and lifting the probability traders assign to a December 2026 rate rise.
- Minutes from the April FOMC showed a move away from language favouring flexible easing and recorded several dissents, with many policymakers flagging that rates may need to stay restrictive if inflation remains above 2 percent.
- The Iran-driven energy shock has broadened price pressures beyond fuel into shipping, airfares and fertiliser, raising inflation expectations and reducing near-term room for the Fed to cut rates.
- Warsh faces his first substantive policy test at the June 16–17 FOMC meeting and must build authority with a committee that has hardened on tighter policy while the White House publicly urges his independence and markets watch for changes that will affect mortgage and borrowing costs for households.