Why a Warsh-Led Fed May Keep Interest Rates Steady

Andrew here. Will Kevin Warsh be able to lower interest rates? We go deep on that question as he is likely to soon be confirmed.

We also go inside the courtroom for Sam Altman’s testimony in the Musk v. OpenAI case. And we take a look at the gobs of lobbying money from Silicon Valley swirling around Washington — and the influence it is buying.

“Impossible situation”

Kevin Warsh appears to be on a glide path to becoming the next Fed chair, with a Senate vote on his nomination coming as soon as Wednesday.

But Warsh’s probable future job has become more complicated. Tuesday’s Consumer Price Index data showed inflation accelerating to a three-year high, leaving him and the central bank in a bind on interest rates.

What Warsh could face: A growing number of economists and Fed officials have warned recently that interest rates shouldn’t come down to counteract inflation propelled by the war with Iran.

That risks drawing the ire of President Trump, whose repeated challenges of Fed independence — including his efforts to fire the governor Lisa Cook and his threats toward the current Fed chair, Jay Powell — are driven by his desire for lower borrowing costs.