However, Kevin Warsh didn’t say if interest rates would change in coming months, as inflation remains stubborn

The US Federal Reserve is not done fighting high inflation, its chair, Kevin Warsh, said in his first major speech in the role on Friday, emphasizing that it was “the Fed’s job to deliver stable prices”.

Warsh did not indicate where the Fed will take interest rates in the coming months, despite US inflation remaining stubbornly above the central bank’s 2% target amid the war in Iran. But his speech was taken by markets as a signal that rates may rise in the coming months, a move that may put him at odds with Donald Trump, who has aggressively called for rates to be cut.

With the federal deficit near 6% of GDP and the national debt over $40tn, America’s fiscal position looks increasingly precarious

• Bessent ‘will lose’ battle with bond markets, ex-mentor warns

Are we seeing the first signs of panic in Donald Trump’s Treasury? The US is by far the world’s biggest debtor, and the steady rise in global long-term interest rates – which I have long argued was inevitable – is starting to cause real pain.

Until now, the Treasury secretary, Scott Bessent, has dismissed concerns about US debt, which recently surpassed $40tn, as a big nothingburger. Growth, in his telling, will be so spectacular the US will easily be able to meet its interest obligations without any significant tax rises or spending cuts, while the rest of the world will happily keep feeding it money. But if Bessent really believes that, why is he trying to strong-arm the bond market by fiddling with the maturity structure of government debt?

The US is scooping up treasury bonds in an effort to raise their price and push yields down – but it’s not working

The bond market is driving the Trump administration crazy. Last week, the treasury secretary, Scott Bessent, announced that the government would sharply ramp up its purchase of treasury bonds, in an effort to raise their price and thus push down their yield, which amounts to the interest rate the government pays on its debt.

It didn’t quite work as planned. Yields on treasurys fell after Bessent’s bond market intervention but soon bounced back. By Friday afternoon, the yield on the 10-year treasury was back near where it was before the secretary’s announcement. The yield on the 30-year bond was again trading around its highest level in 20 years or more.

As yields are dragged higher in the UK, Europe and Japan, the impact for consumers and businesses will be far-reaching

• ‘Starve the beast’? The $40tn cost of Republicans’ false promises to cut spending

Government borrowing costs around the world have surged to the highest levels in decades amid growing fears over US bond market turmoil.

Anxiety about Donald Trump’s handling of the US economy, and concern that the US president’s war with Iran is driving up inflation, are causing a sell-off in the US bond market.

The Federal Reserve, the ECB and the Bank of England appear unclear on how to tackle inflation amid the Iran war

• New UK cost of living crisis looms as rising energy bills lift inflation

As the Middle East crisis drags on into its sixth month, central banks sit in a tricky position. Oil prices remain at elevated levels, stoking inflationary pressures while also threatening to weigh on growth.

The US Federal Reserve, the Bank of England and the European Central Bank are still smarting from the criticism of their inaction in 2022, when inflation soared above 10% in the UK and eurozone and over 9% in the US.

Energy is cheaper than at its peak in late April, but gas is still nearly $1 a gallon more expensive than before the Iran war

US consumer prices cooled slightly in July as the annualized inflation rate dipped down to 3.4%, though prices still remain higher than levels seen before the war with Iran.

Though inflation decreased 0.7 percentage points in June during a brief ceasefire between the US and Iran that brought energy prices down, consumer prices have remained elevated. Price increases hit a three-year high in May, with annual inflation reaching 4.2%.