Kevin Warsh can’t reopen the Strait of Hormuz - CNN

What the report says

CNN reported that Federal Reserve Chair Kevin Warsh is facing pressure to respond to persistent inflation, with some investors expecting the central bank could raise interest rates as soon as Wednesday. Warsh, who recently took over the Fed, has pledged to return inflation to the central bank’s 2% target, but CNN’s analysis emphasized that much of the current price pressure appears tied to supply disruptions rather than excessive consumer demand.

According to the report, inflation is running around 3.5%, well below the 2022 peak but still above target. CNN said higher energy costs linked to the Iran war and disruptions around Middle East supply routes, including the Strait of Hormuz, are contributing to price increases, alongside President Donald Trump’s tariffs. Economists quoted by CNN, including Moody’s Analytics chief economist Mark Zandi and former Fed Chair Janet Yellen, warned that rate hikes are poorly suited to fixing supply shocks and could damage a labor market that remains soft.

The article also noted that artificial intelligence investment is adding to inflation in some sectors, especially through demand for memory, storage and infrastructure components. Moody’s estimated that AI-related pressures could add roughly a quarter percentage point to inflation, while the Iran conflict and trade restrictions account for additional forecasted price pressure.

CNN framed the upcoming Fed decision as unusually uncertain, citing CME FedWatch pricing that showed markets split between a rate increase and no change. The central question is whether Warsh’s Fed will prioritize an anti-inflation signal or avoid tightening policy when higher rates cannot directly resolve war, tariffs or supply constraints.