Berenberg: Fed Transition and Higher Inflation Keep Focus on Policy Minutes - FJElite

Higher-than-expected US inflation for April has pushed Fed rate expectations further upward, with markets now even pricing another rate hike by the end of 2026. Against that backdrop, Kevin Warsh has taken over as Fed chair under intense political pressure from the White House to cut rates quickly.

Even though Warsh has argued in the past for lower rates and has described AI as a disinflationary force that could lift productivity and help contain inflation, it is far from clear that he can deliver immediate easing. The Fed chair does not set policy alone, and any rate cut would still require majority support inside the FOMC. With Jerome Powell remaining on the Board and still voting, it remains entirely possible that a majority could resist the chair if inflation concerns stay elevated. That is why investors are likely to focus closely on Wednesday’s release of the April FOMC minutes.