5 big obstacles Kevin Warsh faces as Federal Reserve chair

Kevin Warsh will face a political and economic obstacle course upon taking the helm of the Federal Reserve later this week.

Warsh is set to be sworn in by President Trump on Friday as the next chair of the Fed board, taking over the central bank at a pivotal time for the U.S. economy.

After years raging against outgoing Fed Chair Jerome Powell, Trump made clear before Warsh’s nomination that he would only consider candidates he could trust to cut interest rates.

Spiking inflation and divides among Fed officials, however, could make it impossible for Warsh to appease the president while fulfilling his duties as Fed chair.

“Kevin Warsh is about to begin his tenure as Federal Reserve chair with what some believe is a mandate from the president to cut rates,” said Joe Brusuelas, chief economist at RSM.

“But the recent rise in market-based breakeven inflation rates strongly implies that Warsh and the [Federal Open Market Committee] will have to prepare for the chance that inflation will continue to rise and that the Fed will have to shift its policy.”

Here are the major obstacles Warsh faces upon taking office.

Trump’s political pressure

Looming over any shift in the economic or financial sector facing the Fed is Trump’s clear insistence that U.S. interest rates should already be lower.

The Fed’s refusal to zero-out interest rates during most of Trump’s first term was the president’s primary gripe with Powell, a Republican whom Trump nominated to chair the Fed in 2017.

Despite Trump’s previous comments, Warsh insisted that the president did not ask him to commit to cutting rates and pledged to make decisions based on the state of the economy.

Trump also waived off concerns about his potential pressure earlier this week, telling reporters that Warsh would be allowed to “do what he wants to do.”

“He’s a very talented guy,” Trump said.  “He’s going to be fine. He’s........

© The Hill