world-economy

Warsh Holds First Fed Meeting as Inflation Hits Three-Year High

Kevin Warsh convened his inaugural Federal Reserve rate-setting committee meeting this week with inflation pressures mounting and interest rate cuts appearing unlikely in the near term. The consumer price index rose 4% in May, marking the largest annual increase since 2023, driven primarily by energy costs stemming from U.S. military conflict with Iran that disrupted tanker traffic through the Strait of Hormuz. Though oil prices have declined following a ceasefire extension, gasoline remains over a dollar per gallon higher than pre-war levels. The Fed's traditional inflation-fighting mechanism—raising rates—provides limited relief against supply-driven price shocks. Some committee members have signaled the next move could be a rate increase rather than a cut. Warsh held his first news conference as markets assess the central bank's policy direction under new leadership.