Kevin Warsh is widely expected to hold interest rates steady in his first meeting as Fed chairman Wednesday afternoon – and all eyes are on whether the committee will signal a more hawkish stance, with the possibility of rate hikes.

When President Trump picked Warsh in January — after years of clamoring for the Fed to slash interest rates — the labor market was showing signs of strain and inflation seemed like it could inch back down after the effects of tariffs wore off.

But since then, the Iran war has created the worst-ever energy supply disruption, sending gasoline prices soaring – and pushing inflation in May above 4% for the first time in three years, according to the Consumer Price Index. 

Though Trump on Sunday announced a deal with Iran to reopen the vital Strait of Hormuz, analysts have warned it could take months for supplies and prices to stabilize.

Investors and economists will be looking closely at the language in the Fed’s policy note for any indication that it is leaning toward raising rates, instead of lowering them. There will also be intense focus on the “dot plot” charting where members of the Federal Open Market Committee see interest rates headed in the coming years.

It’s possible the official statement could lack any indication about future moves at all – which would be seen as a sign of Warsh’s impact on the central bank. He has long criticized Fed members for speaking publicly about future policy decisions.

“We do not expect any change to interest rates at Wednesday’s meeting, as Warsh is likely going to take his time and monitor how inflation responds to the recent drop in oil prices,” James Demmert, chief investment officer at Main Street Research, said in a note Wednesday. 

“While the drop in oil prices helps to ease inflation, it can also spur more economic activity, which could warrant higher interest rates in the future,” Demmert added. “We would not be surprised to see Warsh mention accelerating economic growth and the potential for higher rates going forward, even with the political pressure he is facing to cut rates.”

At Warsh’s swearing-in last month, Trump indicated he would take a hands-off approach to the Fed.

“I want Kevin to be totally independent,” Trump said. “Don’t look at me, don’t look at anybody.”

Meanwhile, Warsh’s predecessor Jerome Powell has kept his seat on the Fed’s governing board – an unusual move for ex-chairmen, who typically leave the bank altogether at the end of their terms at the head of the body.

Powell previously vowed to stay on the board until the Department of Justice’s criminal investigation into him was fully resolved. While the probe was dropped, Powell indicated in April he was sticking around to, in his view, preserve the Fed’s independence. He also promised not to interfere in Warsh’s job.