Warsh’s New Challenge: Containing the Fed’s Inflation Hawks (1)

Kevin Warsh won the race for Federal Reserve chairman partly by mapping out a route to lower interest rates. Now, the new Fed chief faces a starkly different dynamic: How to restrain a sudden shift in expectations for higher rates as fellow policymakers warn that inflation is back.

The challenge was laid bare Thursday when new data showed the Fed’s preferred gauge of inflation rose 3.8% in the 12 months through April. That’s the highest level since 2023, and almost two full percentage points above the central bank’s 2% target.

Fed watchers say the window for a rate cut has ...