US inflation accelerated sharply in April, with the consumer price index (CPI) rising 3.8% year over year, up from +3.3% in March and above the +3.7% consensus among economists.

Hot CPI print kills the dovish dream of the Warsh-Trump duo

It is bad news for Kevin Warsh, who in a matter of days is set to become the new Chair of the Federal Reserve, and it is even worse news for President Donald Trump, a vocal advocate of a monetary policy built around low US rates even as inflation runs hot.

With that +3.8% print, headline CPI rose at its fastest annual pace since May 2023. On a monthly basis the index climbed +0.6%, in line with forecasts.

Stripping out the more volatile energy and food components, core CPI rose +0.4% on the month and +2.8% on the year — confirming, in annual terms, that the underlying pace of inflation remains well above the Fed’s 2% target.

The US-Iran war, in short, continues to send its bill to the Federal Reserve, which now has very few reasons — if any — to resume easing, despite Trump, who chose not to renew the mandate of current Fed Chair Jerome Powell and picked Warsh precisely in the hope of seeing US rates come down.

Markets have already weighed in, pricing in unchanged US rates for the rest of the year while at the same time starting to factor in the possibility of a tightening move.

Energy and gasoline drive the surge

The biggest contributor to the inflation acceleration — much as in the Eurozone — was the spike in energy prices, hit by the fallout of the Middle East conflict.

Energy prices jumped +3.8% month over month and a striking +17.9% year over year. Food prices were also on the rise, up +0.5% on the month and +3.2% on the year. The gasoline subcomponent surged +28.4% year over year.

Inflation also made itself felt in segments not directly tied to the US-Iran war. Housing costs, which weigh roughly a third of the overall CPI basket, climbed +0.6%, matching the rise in apparel, while airline fares posted a +2.8% monthly increase and an eye-watering +20.7% on the year.

Markets and economists: no cuts on the table

These numbers add further weight to market speculation and to the views of several economists and market strategists who expect Warsh’s Fed to keep doing what Jerome Powell has been doing since the start of 2026 — leaving US rates parked in the 3.5%–3.75% range.

Among the loudest voices is investor Paul Tudor Jones, who when asked by CNBC about the direction of rates put it bluntly: «If I think (Warsh) will cut rates? Zero probability», he commented.

On top of that, even if Warsh did see a case for cutting, he would most likely not dare make a move that widens the rift already visible inside the FOMC, the Federal Reserve’s monetary policy arm — which, as confirmed at the last meeting, is the most divided it has been in 34 years. That is a warning shot for Warsh himself, who according to commentators will not want to start his tenure as Fed Chair at the next FOMC meeting by fueling further tensions.

Editor’s note

This article was originally published in Italian on money.it by Laura Naka Antonelli on May 12, 2026 as «Inflazione USA corre con guerra Trump, record da 2023. Tassi Fed, Warsh in un vicolo cieco?». It has been translated and adapted for an international audience by the Money.it International desk.