BlockBeats News, May 20th - Driven by the US-Iran war escalation pushing up energy prices, US Treasury sell-off, and concerns over the fiscal deficit, the US 30-year Treasury bond yield rose to its highest level since 2007, intensifying market worries about inflation and high interest rates. Kevin Wash, who is set to be sworn in as Federal Reserve Chair later this week, is facing multiple pressures: on one hand, the White House has been continuously calling for interest rate cuts, while on the other hand, the majority of Federal Reserve officials lean towards maintaining high interest rates.

During a recent interview, President Trump stated that he would "let Wash do what he wants to do," calling him "very talented." However, just last month, Trump publicly stated that he would be disappointed if Wash did not cut interest rates immediately upon taking office. Analysts believe that this statement indicates that the White House has begun to "prepare an exit strategy" for not cutting rates in June.

Economist Derek Tang stated that Trump seems to realize that Federal Reserve interest rate decisions are made collectively by the Federal Open Market Committee (FOMC) and not by the Chair alone. "This has provided Wash with some maneuvering room at the beginning of his tenure at the Federal Reserve."

Currently, the voices within the Federal Reserve in support of a short-term rate cut have significantly diminished. With the rise in energy prices, US inflationary pressures have rekindled, the labor market remains stable, and market expectations for a rate cut this year continue to wane.

Former Federal Reserve economist Julia Coronado stated: "There is hardly any evidence of deflation at the moment, and the war will further worsen the fiscal situation. The path to a rate cut may require going through a recession first."

Michael Feroli, Chief US Economist at JPMorgan Chase, also pointed out that in the current environment, Wash's efforts to steer the committee towards a rate cut this year would become more challenging. Additionally, Jerome Powell, who is about to step down, is expected to remain on the Federal Reserve Board, which the market believes will also limit Wash's ability to quickly reshape the policy direction.