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2026-05-28 20:23:33
[Wash Faces Challenge: Door to Rate Cuts Closed, Need to Curb Rate Hike Expectations] (1) Kevin Warsh won the race for Federal Reserve chairman partly because he outlined a path to rate cuts. (2) Now he faces a very different situation: how to curb the sudden surge in rate hike expectations as other policymakers warn of a resurgence of inflation. Observers say the energy shock triggered by the conflict with Iran has closed the door to rate cuts; for Warsh, maintaining the current interest rate may be a victory. (3) Wolfe Research chief economist Roth points out that the market has no appetite for rate cuts, and Warsh must find a way to eliminate the already priced-in rate hike expectations—his biggest challenge this year.
