Trump’s man can’t do what the president wants from him

May 13, 2026 — 12:00pm

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When Jerome Powell relinquishes the US Federal Reserve Board’s chair on Friday the latest US inflation data will ensure that his successor, Kevin Warsh, will defy any expectation that he will be Donald Trump’s “sock puppet.”

He’ll have to. The April inflation data shows US inflation has jumped up to its highest levels in three years.

With no end to the war in the Middle East in sight and a likelihood that oil prices – and the prices of gasoline and diesel – will climb further as the full effects of the closure of the Strait of Hormuz flow through, there’s probably more chance of rate hikes than the rate cuts that Trump has demanded, and that he expects of Warsh.

US inflation is accelerating, as it is around the world. In February, the inflation rate was 2.4 per cent. In March, as the US and Israel mounted their assault on Iran, it was 3.3 per cent. In the latest data, for April, it climbed to 3.8 per cent. The likelihood is that, when May’s numbers arrive, they’ll be even higher.

Even with volatile energy and food costs stripped out to provide the “core” number the Fed usually focuses on, the inflation rate rose from 2.6 per cent in March to 2.8 per cent in April – solidly above, and moving further away from, the Fed’s target of 2 per cent.

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The impact of the war on energy costs, however, can’t be ignored. It is already feeding, not just into gasoline and diesel prices, both of which are more than 50 per cent above their pre-war levels, but more broadly into the economy.

Grocery prices – most notably fresh fruit and vegetables, beef and coffee – are soaring, as are clothing, plastics, airfares and housing costs, as higher transport and petrochemical........

© The Age