Trump Leaves Rate Decisions to Fed Chair Warsh as Inflation Drives Year-End Hike Bets

U.S. President Donald Trump has continued to call for lower interest rates but stressed that the decision would be left to Federal Reserve Chair Kevin Warsh. The stance has implications for the Fed’s policy independence and has prompted markets to reassess whether monetary policy can turn more accommodative under its dual mandate of price stability and maximum employment.

U.S. consumer inflation accelerated to a three-year high of 3.8% in April, while nonfarm payroll growth nearly doubled from the previous period. After both inflation and employment data exceeded expectations, market-implied odds of a Fed rate increase by year-end surged to 96%, while the first rate cut could be delayed until 2027.