New Fed chairman Warsh faces the inflation quandary

Kevin Warsh was sworn in yesterday as the 17th chair of the Federal Reserve. The Senate confirmed the 56-year-old former Fed official, chosen by President Donald Trump, in a mostly party-line vote. Warsh takes charge amid the Iran war, high gas prices and rising inflation. President Trump has pushed hard for the Fed to lower interest rates, largely to increase borrowing, investment, hiring and consumption. To make this possible, Warsh plans to sell some of the bonds the Fed owns. This could help lower mortgage rates and other long-term rates and open the door to cutting the main short-term interest rate. However, as long as the U.S. government keeps running trillion-dollar deficits, it will be nearly impossible to keep both interest rates and inflation low at the same time.