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The Federal Reserve has dropped its bias toward lower interest rates as Kevin Warsh takes charge of the central bank, a shift forced by inflation that has climbed to nearly double the Fed's target.
The proximate cause, in the Fed's own framing, is Donald Trump's war in Iran — a conflict whose commodity disruptions have made the conditions for easing politically and economically untenable.
A New Chair, A Different Posture The Warsh era opens not with inherited momentum toward accommodation but with a policy stance reset.
Abandoning a bias toward cuts is a meaningful signal: it tells markets and trading desks that the next move is no longer presumed to be down, and that the Fed is recalibrating its reaction function under new leadership.
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