The new chairman of the Federal Reserve, Kevin Warsh, holds his first news conference this afternoon.

President Trump chose Warsh to lead the central bank in hopes he would push for lower interest rates. But with inflation at a three-year high, that's probably going to have to wait. Here are three things to know:

1. Inflation is moving in the wrong direction, and there's not much the Fed can do about it

The cost of living in May was up 4.2% from a year ago. That's the biggest annual increase since 2023. And it's mainly driven by the spike in energy prices resulting from the U.S. war with Iran, which snarled tanker traffic in the Strait of Hormuz — a vital energy shipping corridor.

Even though oil prices have come down in recent days since the two countries agreed to extend their
ceasefire, gasoline prices are still more than a dollar a gallon higher than they were before the war began.

Unfortunately, the central bank's inflation-fighting tool — raising interest rates — has little effect on this kind of supply shock, since it doesn't produce more oil or gasoline. But until inflation starts to moderate, the Fed is not likely to lower interest rates. In fact some members of the Fed's rate-setting committee have signaled their next move could just as easily be a rate increase.

2. Bernanke said monetary policy is 98% talk, 2% action. Kevin Warsh doesn't believe in that

In March, before the wartime price spike had really taken hold, the average Fed policymaker was projecting one quarter-point interest rate cut this year.

Members of the rate-setting committee will update those forecasts this afternoon, and investors will be watching for any change. Markets are betting that interest rates will be higher at the end of the year than they are now.

Warsh has been critical of the central bank's public rate forecasts — known as the "dot plot." He thinks they limit the Fed's maneuvering room, even though policymakers have said repeatedly, the forecasts are just a guess, not a roadmap.

In general, Warsh thinks members of the rate-setting committee should keep their cards close their vest, and not give so many speeches. But that could be a tough sell for those other committee members who are all independent actors and don't necessarily take their marching orders from the chairman.

"I'm hard pressed to see other members of the [committee] restrain themselves unless they can be convinced that monetary policy would be better made and it's better for them politically to say less," says Sarah Binder, a senior fellow at the Brookings Institution and co-author of The Myth of Independence: How Congress Governs the Federal Reserve.

A lot of Fed policymakers think speeches and op-eds are important tools in their toolkit. Former Fed chairman Ben Bernanke liked to say monetary policy is 98% talk and 2% action.

3. Jerome Powell is no longer chairman of the Fed, but he still has a seat at the decision-making table

Warsh's immediate predecessor, Jerome Powell, opted to retain his seat on the Fed's governing board after his term as chairman expired last month. This is highly unusual. Most Fed chairs leave the central bank altogether when their term as chair is over. Powell probably would have done so too, had President Trump not waged such a relentless campaign to bend the central bank to his own will.

Trump tried to fire a Fed governor. He even had his Justice Department launch a criminal investigation of the central bank.

In response to that high-pressure campaign, Powell decided to stick around, to help preserve a firewall between the White House and the Fed. While that's potentially awkward for Warsh, Powell has said he plans to keep a low profile and won't try to compete with the new chairman.
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