Kevin Warsh walks into his first Fed meeting today carrying conditions nobody designed for him. Trump appointed him — presumably expecting a friendlier era of rate cuts eventually. Trump then launched a war that drove oil past $100 and pushed inflation to 4.2%, its worst reading in three years. The ECB raised last week, the first hike since 2023. Bond markets have been signaling higher rates are warranted for months. And Trump, surveying all of this, told reporters he “loves the inflation” — before clarifying he meant he loved it being less bad than it could be, which is not the reassurance anyone was looking for.

Warsh is reportedly going to hold today, and also reportedly going to withhold his own “dot” from the rate-path projection — a way of keeping his hand close. A new chair playing coy in his first meeting is unsurprising. What’s less comfortable is the structural position: hold and the bond market concludes he’s softer than he appeared; raise and he confirms what half of Wall Street already suspects about who exactly he was appointed to serve.

Oil is below $75 today on Hormuz reopening bets. If the Iran deal solidifies, that’s disinflationary in a hurry, and it gives Warsh cover to hold indefinitely without looking like he’s buckling. Which might be the cleanest exit available: a peace deal doing the Fed’s work for it.

The ECB hiked into a supply shock. The historical track record on that isn’t encouraging. But historical track records rarely account for a new central bank chair trying to thread this specific needle.

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