Warsh Caught Between Trump and Bond Market Bet on Rate Hikes (3)

Just three weeks into the job, Federal Reserve Chairman Kevin Warsh is already facing an unusually high-stakes test.

Inflation is roaring back at the fastest pace in three years. There’s growing dissent among the central bank’s policymakers. And investors have been dumping US Treasury bonds and piling into bets the Fed will need to startraising rates by December, defying President Donald Trump’s call to lower them instead.

Kevin Warsh, left, and President Donald Trump during a swearing-in ceremony at the White House on May 22.

Photographer: Al Drago/Bloomberg

There’s little hanging on the outcome of the Fed’s policy meeting itself this week. The bank is widely expected to hold its benchmark rate steady in a range of ...