The new head of the U.S. Federal Reserve is poised to avoid a confrontation with President Donald Trump as cooling inflation eases pressure on the central bank to increase interest rates.
Official figures released on August 11, 2026, showed consumer prices climbed 3.4 percent in the year to July, a decrease from 3.5 percent the previous month. This drop indicates that the Fed and its new chairman, Kevin Warsh, are likely to keep U.S. interest rates within the 3.5 percent to 3.75 percent range at their next meeting.
This stance would avert a potential clash with President Trump, who has consistently advocated for lower interest rates since taking office. "No nasty surprises means Warsh can maintain his wait-and-see bias," said Matt Cornwell, a portfolio manager at Nedgroup Investments.
The latest inflation report follows news of unexpected job losses in July and suggests limited impact from the oil price shock originating from the Middle East conflict.
However, economists caution that a rate increase remains a possibility, as inflation is still above the Federal Reserve's target of 2 percent. "The report should further ease the Fed’s fears about an energy-driven inflation spiral," said Scott Anderson, chief U.S. economist at BMO Capital Markets. "The Fed will need to see more evidence that core services inflation is truly moderating before they take their rate hike threat completely off the table."