The new Federal Reserve Chair Powell immediately faces dual challenges: soaring inflation + pressure from Trump to cut rates

On May 17, FOX reporters disclosed that the new Fed Chair Kevin Wirth faces a dual challenge as soon as he takes office: inflation rising to an annualized 3.8% (the highest since May 2023) and pressure from Trump to cut rates.
The Iran war has pushed energy prices higher, wholesale price increases outpace consumer prices, and rate hike expectations have returned within the year.
Wirth himself is a firm inflation hawk, but his room to cut rates is extremely limited, and former Fed Chair Powell still retains voting rights, making decision-making less unified.
Why it matters: The shift in Fed policy expectations is reshaping global liquidity expectations, with the US 10-year Treasury yield soaring to 4.53%, a one-year high, and risk assets under short-term pressure.
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