Opinion: New Fed Chair Woah Faces Dual Challenge of Inflation and Balancing Trump Rate Cut Pressure

May 17 — Fox News reporter Charles Gasparino reports that newly installed Federal Reserve Chair Kevin Wash is facing two core challenges right out the gate: scorching inflation and intense pressure from former President Trump to cut interest rates. Consumer inflation has hit an annualized 3.8% — the highest level since May 2023 — with the Iran war named as the primary driver of spiking energy costs. Last week, wholesale prices jumped even faster than consumer prices. By Friday, futures markets had shifted to pricing in rate hikes this year, wiping out most earlier expectations of cuts. Wash is a well-known inflation hawk. After leaving the Fed in 2011 to take an academic role, he has repeatedly bashed the era of "easy money" under predecessors Bernanke, Yellen, and Powell in opinion pieces, advocating for tighter "restrained" policy to shrink the central bank’s balance sheet. He argues that years of loose Fed policy are the root cause of today’s persistent high inflation. But with inflation still running hot, he has very little room to cut rates. Compounding these issues, the Fed’s rate-setting committee is no longer aligned. Former Chair Powell, who was removed by Trump, still holds a voting seat on the Fed’s board. Powell has said he won’t step down until congressional investigations into the Fed’s new headquarters building costs wrap up; that probe was launched by Trump and had earlier delayed Wash’s confirmation. Trump, who tapped Wash for the top Fed spot, is now pushing hard for rate cuts — but if Wash caves to that demand, it would directly clash with his long-held policy beliefs. The Iran war is now in its third month with no clear end in sight; if oil prices top $200 a barrel, the U.S. economy could face a repeat of the 1970s "stagflation" crisis: stagnant growth paired with sky-high inflation.