Analysis: Trump said he loves inflation. Why that should be music to Kevin Warsh's ears

• Inflation hit 5.1% in May 2026, the highest in three years, driven largely by the Iran war disrupting oil transit through the Strait of Hormuz, but core CPI excluding energy and food rose only 2.9%
• Warsh will chair his first Fed meeting next week with markets expecting rates to hold steady at 3.5%-3.75%, as both he and Trump support 'looking through' the temporary supply shock rather than raising rates
• Trump's hands-off approach to Warsh contrasts sharply with his treatment of Powell, whom he called 'stupid' and targeted through investigations into his deputy and Fed office spending

Summary: Trump's Inflation Stance Aligns with New Fed Chair Warsh

Key Development: President Trump has shifted his approach to Federal Reserve leadership, expressing support for new Fed Chair Kevin Warsh's cautious stance on interest rates despite inflation reaching 5.5% annualized—the highest in three years.

Main Figures:

• Kevin Warsh: Recently sworn in as Federal Reserve Chair, replacing Jerome Powell
• Interest Rates: Currently held at 3.5%-3.75% since December; expected to remain unchanged at next week's meeting
• Inflation Data: Overall CPI up 5.5% year-over-year in May; core CPI (excluding food and energy) rose 2.9%

Context: The Iran war has disrupted oil tanker transit through the Strait of Hormuz since March, driving energy prices higher. Multiple Fed officials, including Dallas and Cleveland Fed Presidents, have suggested rate increases may be warranted this year.

Policy Implications: Warsh advocates "looking through" temporary supply shocks, focusing on underlying inflation rather than one-time geopolitical disruptions. Trump endorsed this view, stating inflation will "come down like a rock" when the war ends and declaring he wants Warsh to "do whatever he wants" independently.

Political Shift: This marks a dramatic reversal from Trump's treatment of Powell, whom he repeatedly pressured to cut rates, called "stupid," and whose administration he attempted to pressure through investigations into Fed officials. Trump previously wanted rates as low as 1%.

Market Outlook: Warsh chairs his first Federal Open Market Committee meeting next week with a press conference scheduled for June 17. Rate cuts appear unlikely in the near term given elevated inflation readings and the new political dynamic between Trump and Warsh.