New Chairman of the Federal Reserve Kevin Warsh arrives during a swearing in ceremony in the East Room of the White House in Washington, DC on May 22, 2026. Aaron Schwartz | Afp | Getty ImagesAnother big jobs report in May has pretty much swept aside the possibility of interest rate cuts anytime soon — and in the process underscored the tricky policy path ahead for new Federal Reserve Chair Kevin Warsh.The chance of rate reductions already had been on life support heading into Friday’s nonfarm payrolls report. But the unexpectedly strong gain of 172,000, compounded by sharp upward revisions for prior months, makes the case for policy easing even weaker, particularly considering the elevated level of inflation and uncertainty over the Iran war.”If I’m at the [Fed], I say, ‘look, job growth is good, there’s no need for us to support the labor market. Inflation is high,'” said Gus Faucher, chief economist at PNC. “So therefore we can keep the fed funds rate where it is right now until we get a better picture of what’s going on on the inflation front.”Indeed, market expectations shifted even further after the nonfarm payrolls report. Traders priced in an even lower chance of a cut at the June 16-17 meeting and raised the odds of a hike by the end of 2026 to about 70% nearing midday Friday, according to the CME Group’s FedWatch measure of futures prices.Warsh’s dilemma, though, runs deeper than the simple calculus of where rates are headed. A number of his colleagues have been challenging not merely the chair’s positions but the framework and filter through which policymakers interpret inflation, growth and the appropriate stance of monetary policy.Challenges from his Fed peersIn recent days, multiple central bank officials have spoken in public and challenged, without mentioning his name, several core policy assumptions and positions that Warsh has held since he emerged as a candidate for the chair’s …
