Kevin Warsh, Donald Trump's newly installed Federal Reserve chair, has drawn criticism for suggesting the central bank can leave the job of tackling stubborn US inflation largely to financial markets rather than acting itself. Speaking after the Fed's policy committee voted not to raise interest rates despite inflation running at double its 2% target, Warsh pointed to rising long-term bond yields as evidence that markets were already "doing quite a bit" of the necessary tightening, even though the Fed itself had "not done much in 42 days". Critics argue this hands-off approach echoes a familiar conservative contradiction — decrying government intervention while in charge of the very institution meant to intervene — and risks undermining the Fed's credibility as an economic steward at a delicate moment.

Markets reacted badly: US government bond prices fell, pushing long-term interest rates higher, with the yield on 30-year Treasury bonds hitting its highest level in 19 years, while stock markets also dropped. Investors voiced concern that Warsh's reluctance to raise rates, despite Trump's public demands for cuts, may be politically motivated rather than purely economic. Warsh described the economy as "solid" and labour markets as "strong" but offered little concrete policy guidance beyond saying he was "resolute" in doing his job. He has also floated holding fewer rate-setting meetings and scaling back post-meeting press conferences — a transparency practice introduced under former chair Ben Bernanke — fuelling worries about a less accountable, more opaque Fed.