US President Donald Trump arrives with Federal Reserve Chairman Kevin Warsh at Warsh’s swearing-in ceremony at the White House in Washington, DC, US, May 22, 2026.
Jonathan Ernst Reuters
With inflation nearing 4%, the Trump administration is easing its long-standing calls for the Federal Reserve to cut interest rates faster. That gives new Fed Chairman Kevin Warsh a long period of political grace as he faces a challenging economic climate, but underscores the depth of the pushback he could face if a sympathetic president changes his mind.
President Donald Trump said as recently as Wednesday that he wants the Fed to cut rates. Meanwhile, many of the president’s top economic advisers in recent interviews and writing have stopped short of calling for a near-term rate cut, as they did before the Iran war sent prices down and Trump installed Warsh as the new Fed chairman.
What might appear to be a split is a sign that the Trump-Warsh relationship has taken away some of the gravitas from the Trump administration, a White House official said, speaking on condition of anonymity to describe behind-the-scenes discussions.
“I wouldn’t say it’s a change in policy, or how we see the data,” the official said. Instead, “staff is big for this president,” the official said. Trump has “confidence and faith” in Warsh and will therefore allow him to make decisions that he did not delegate to Jerome Powell, the former chairman.
“Ever since Epic Fury and since Warsh has been in there, I think the presidency is more serious than ‘there has to be a price cut,'” the official said, adding that “there is no daylight” between the president and his advisers.
Inflation rose 4.1% in the year ending in May, according to Bureau of Economic Analysis data released Thursday. The Fed wants that rate, personal consumption expenditures, to be 2%.
High energy prices from the war contributed greatly to the high readings. Excluding them and volatile food prices, so-called core inflation rose 3.4%.
Warsh said last week the Fed was keeping an eye on data like that. “The Fed will bring price stability,” he said. He and the Fed’s interest rate committee voted to keep interest rates steady and ended a long-standing program that biased the Fed toward lowering interest rates.
About half of the Fed’s policy makers he said in the estimates released last week that they expect interest rates to increase this year. Markets now see a 79% chance of a rate hike by the end of December, according to CME FedWatch on Friday, and they don’t expect a cut.
White House trade adviser Peter Navarro wrote in an opinion piece Thursday that the new inflation data made a “strong case” for the Fed.
Navarro had previously asked for a reduction in the rate. In an email to CNBC, he said his view that the Fed should hold rates now is consistent with his past arguments and the president’s current position. His point in the story was that it was “foolish” now to consider raising the rate, he said.
“Rates should be lower and would have been lower if the Fed had done the right thing last year,” Navarro said in an email.
Treasury Secretary Scott Bessent said Tuesday at an event in New York that Warsh would “stand up for himself and do what he wants.” In an interview the next morning on CNBC, Bessent declined to say whether the Fed should cut. But people should “keep an open mind,” he said.
“Let’s see what inflation looks like on the other side” of the Iran conflict, Bessent said.
Some in the market saw Bessent showing that he has come to step up under Warsh.
“From the Fed, I felt the green light to go,” Neil Dutta, chief economist at Renaissance Macro Research, wrote to clients on Tuesday.
The Treasury Department declined to comment on how Bessent’s views align with Trump’s.
Kevin Hassett, director of the White House National Economic Council, also suggested that he support the suspension of the Fed under Warsh. “The first meeting, you want to put your feet down and settle down,” Hassett said on CNBC on Tuesday.
Trump said he wants Warsh to “do whatever he wants” and be “completely independent.”
But on Wednesday, the president returned to his requests to lower interest rates. “We need low interest rates. Low interest rates will solve everything, they will solve that now,” Trump said at an Oval Office event.
Energy prices fell after an agreement to reopen the Strait of Hormuz, an international waterway that has become the center of global oil supply. The average price of a gallon of gas in the US was $3.90 on Friday, down 58 cents from a month ago, according to AAA.
But with the Middle East remaining volatile, it’s not clear what the long-term deflation will look like or what the inflation picture will look like when the Fed next meets in late July. Iran’s military attacked a cargo ship in the crisis on Thursday.
All of that means increased patience will be required of Warsh. The White House said that was all that was offered.
“President Trump and administration officials are all saying the same thing: everyone has confidence in Chairman Kevin Warsh and, despite temporary disruptions in energy markets, the Trump administration’s policies to cool inflation to pave the way for interest rate cuts,” White House spokesman Kush Desai told CNBC.
