Renewed Iran hostilities, a new round of global tariffs, a surge in data‑centre
investment and still‑strong US consumption have increased inflation upside,
reinforcing expectations of sustained policy tightness or further Fed hikes.
Markets largely price the Fed to hold at Wednesday’s meeting. Kevin Warsh, who
assumes the chair at end‑May, will find his ability to restrain internal hawks
increasingly dependent on a sustained improvement in inflation. Public polling
shows dissatisfaction with Trump’s economic performance, and higher rates would
further hurt the White House’s prospects. Trump reiterated calls for rate cuts
this week but said Warsh is capable and that more political committee members
must agree; if the Fed hikes, he is likelier to single out other Fed officials.
Trump has appointed three of the Fed’s seven governors.
