\n And then, weeks later, the inflation side<\/a> of the Fed\u2019s mandate reared its ugly head. The war with Iran caused oil, diesel, jet fuel and gasoline prices to skyrocket.\n <\/p>\n \n That raised the risk of Warsh having to lead the Fed through a dreaded two-sided battle, with officials forced to decide whether to rescue the job market by cutting rates or put out the inflation fire<\/a> by hiking rates.\n <\/p>\n \n But now, the immediate challenge facing Warsh looks a bit less daunting.\n <\/p>\n \n Not only has the job market raced back to life this spring, but energy prices are plunging. The US-Iran agreement to halt the 15-week-long war and reopen the Strait of Hormuz has eased fears of a lasting inflation spike, reducing the urgency for Warsh to consider a rate hike in the immediate future.\n <\/p>\n \n \u201cIt takes some pressure off Warsh. It means the worst-case for hikes is more off the table than on it,\u201d said Benson Durham, a former Fed official and founder of DASM LLC, an independent research firm.\n <\/p>\n \n To be clear, Warsh was never going to raise rates in his first meeting this week. The odds of a rate hike on Wednesday are almost zero. He was likely not going to cut rates either, even though he faces intense pressure from Trump, who has joked<\/a> that he would \u201csue\u201d Warsh if he doesn\u2019t lower borrowing costs.\n <\/p>\n \n But a growing number of Fed officials have warned that rate hikes could eventually be needed to drive inflation down.\n <\/p>\n \n Even though details remain scarce on the US-Iran framework and many challenges<\/a> remain, oil futures plunged to three-month lows<\/a> on Monday.\n <\/p>\n \n Gas prices, which play a key role in shaping consumer psychology about inflation, have already declined 25 days in a row to two-month lows.\n <\/p>\n \n \u201cThe lower path for oil means a smaller inflation wave than feared\u2026 less extended supply chain disruptions and, importantly, much reduced risk of a spike to new highs that would shock inflation expectations,\u201d Krishna Guha, vice chairman and head of economics and central bank strategy at Evercore ISI, wrote in a note to clients on Monday.\n <\/p>\n \n The US-Iran framework and oil market sell-off is \u201cnudging up the likelihood that the Fed will be able to tough it out without raising rates,\u201d Guha said.\n <\/p>\n \n Eric Rosengren, former president of the Federal Reserve Bank of Boston, told CNN that the US-Iran framework is \u201cclearly positive news.\u201d\n <\/p>\n \n \u201cIt\u2019s a first step but it\u2019s a positive for the economy and the Fed,\u201d he said.\n <\/p>\n \n However, Rosengren noted that the formal signing of the agreement is not scheduled until Friday, after the Fed meets.\n <\/p>\n \n \u201cI don\u2019t think they will put too much stock in a memorandum of understanding that doesn\u2019t have details sorted out. It only takes a bomb in Beirut or a ship getting attacked to completely change the environment,\u201d he said.\n <\/p>\n \n Indeed, oil market researchers caution that the US-Iran agreement won\u2019t immediately return traffic <\/a>in the Strait of Hormuz to pre-war levels.\n <\/p>\n \n And the market is not signaling a swift return to pre-war prices either. The futures market doesn\u2019t see Brent returning to $75 a barrel until 2028.\n <\/p>\n \n Still, Fed watchers say the fact that there is a US-Iran framework will allow Fed officials to avoid overreacting to another hot inflation report in June. The agreement boosts the wait-and-see approach advocated by doves at the Fed, who are generally more willing to keep rates lower.\n <\/p>\n \n \u201cThe Fed is on a firmer footing and has a little more certainty about next steps. The Fed is now less likely to react strongly to near-term inflationary pressures,\u201d said Durham, the former Fed official who now teaches at Columbia University and New York University.\n <\/p>\n \n Of course, Warsh still faces plenty of challenges, including winning over the new colleagues he was previously critical of.\n <\/p>\n \n \u201cKevin is very good one-on-one. He\u2019s a smart guy and very personable,\u201d said Rosengren, who served with Warsh at the Fed during the 2008 financial crisis.\n <\/p>\n \n Back then, Warsh sounded deeply concerned about inflation<\/a>.\n <\/p>\n \n Even in April 2009, during the middle of the Great Recession when unemployment was skyrocketing, Warsh said he was \u201cmore worried about upside risks to inflation than downside risks,\u201d according to Fed meeting minutes<\/a> that were later released. (At the time, the Consumer Price Index<\/a> was -0.4%, compared with 4.2% this past May).\n <\/p>\n \n More recently, as Warsh was being considered as a replacement for Jerome Powell, he expressed a willingness to cut interest rates in part because of hopes that the artificial intelligence boom will raise productivity and lower inflation.\n <\/p>\n \n \u201cDuring the financial crisis, he was very concerned about inflation, including energy prices,\u201d Rosengren said. \u201cI hope now that he\u2019s not running for the job, he goes back to being as concerned about inflation as in the past.\u201d\n <\/p>\n","protected":false},"excerpt":{"rendered":"Summary A framework agreement between the US and Iran is easing pressure on Federal Reserve Chairman Kevin Warsh.…\n","protected":false},"author":2,"featured_media":740425,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-740424","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/740424","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=740424"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/740424\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/740425"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=740424"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=740424"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=740424"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"A](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/2026-05-16t050359z-2064873911-rc2c7la1fyga-rtrmadp-3-usa-gas-prices-colorado-20260615192024779.JPG\")
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