New Delhi, May 28 -- KEVIN WARSH'S first day in his new job on May 22nd was instructive. For the first time in nearly 40 years, the chairman of the Federal Reserve was sworn in at the White House-an odd setting for the head of an institution that prides itself on political distance. Donald Trump nevertheless assured his hand-picked inflation dove that he should be "totally" independent. Hours later, at a rally in New York, the president sketched the boundaries of that independence. "I had a rotten head of the Fed, now I have a great head of the Fed," he boasted, before predicting that interest rates would come down "very quickly".

The path to lower rates has narrowed since he nominated Mr Warsh in January. As war in Iran pushed up energy...