What's the new Federal Reserve Chairman thinking?

For Marketplace, I'm Novosafo. Good morning.

This is the first week on the job for the Federal Reserve's new chairman, Kevin Warsh.

He was sworn in on Friday, and soon after, President Trump at a rally, said he expects interest rates to come down quickly.

Meanwhile, Warsh's new colleague, Federal Reserve Governor Christopher Waller,

on that same day, said it will be, quote, kind of crazy to talk about rate cuts in the near future.

Julia Coronado joins me now to discuss the dueling pressures facing the new Fed chair.

She's founder and president of macro policy perspectives.

Julia, good morning. Good morning. So let's begin with why would it be crazy to be thinking

about cutting rates right now? Well, because inflation is a full percentage point above the Fed's

target and it looks like it's going higher in the near future, not lower. And it's been above the Fed's target for

five years now. So people on the committee are getting kind of uncomfortable about the situation.

And speaking of the committee, what do you think the rest of the Fed policy setting committee is

thinking right now about the near term?

Right. So this is a large body of 19 people and many of them, in fact, most of them in the recent meeting agreed that if inflation continues to linger above the Fed's target, move away

from the Fed's target that they would need to contemplate

rate hikes, not rate cuts. So there does seem to be a growing agreement amongst most of the

people on the committee that rate cuts would be ill-advised in the current environment.

Do we know what Kevin Warsh is thinking right now?

Has he given any hints as to the direction he's going to go in in the short term?

All we know is what he said during his confirmation hearing, which is that he still thinks rate

cuts will be appropriate at some point because AI is going to boost productivity and that's going to help bring inflation down.

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