Since then, inflation has surged to a three-year high, and the labor market has stabilized. Just days before the June meeting, the United States struck a tentative deal with Iran to end the conflict, causing oil prices to drop sharply.

The Fed also has a new chairman, Kevin M. Warsh, who was sworn in a few weeks ago. Mr. Warsh, who served as a governor at the Fed during the global financial crisis, is an avowed critic of the dot plot. He has argued that these forecasts make it harder for the central bank to stay nimble when the economic backdrop shifts.

Here’s what could change in the forecasts on Wednesday and how to interpret those updates.

The dot plot, decoded.

When the central bank releases its Summary of Economic Projections each quarter, Fed watchers focus on one part in particular: the dot plot.

It will show Fed policymakers’ estimates for interest rates through 2028 and beyond. The forecasts are represented by dots arranged along a vertical scale — one dot for each of the Fed’s 19 officials. While only 12 cast a vote at each meeting, all 19 can submit forecasts for rates and the economic outlook over the short and long terms.

One focal point of the June meeting is whether Mr. Warsh will submit his own projections. Many economists expect him to opt out given his opposition to the whole exercise. But others warns that to do so could create tension with his new colleagues.

Economists closely watch how the dots shift for hints about where policy is heading. They fixate on the middle, or median, dot. It is regularly cited as the clearest estimate of where the Fed sees rates going over a given period.

The forecasts should be viewed cautiously. The dot plot does not represent a preset plan for policy, but rather a compilation of officials’ projections at a moment in time. It can be a helpful communications device. But when the economic outlook is uncertain, it can muddy the Fed’s message.

The central bank is trying to achieve two goals when it sets policy: low, stable inflation and a healthy labor market.

When it perceives elevated inflation to be a concern, it raises rates to make borrowing money more expensive, which cools the economy. When the economy is sluggish and in need of support, the Fed does the opposite and lowers rates to stoke demand.

Any changes to the 2026 rate outlook will be closely monitored. With or without Mr. Warsh’s forecast on Wednesday, most officials are poised to scale back their expectations for rate cuts from estimates three months ago. The median estimate is expected to at least show no cuts by year-end rather than the quarter-point reduction that was previously forecast. Some officials are likely to pencil in at least one rate increase, reflecting what is expected to be a significant revision higher in the inflation forecast.

How restrictive are interest rates?

When you read the dot plot, it’s important to pay attention to where interest rate estimates fall in relation to the longer-run median projection. That number is sometimes called the “natural” or “neutral” rate. It represents the theoretical dividing line between monetary policy that is set to speed up the economy and a policy meant to slow it down.

The neutral estimate has ticked higher in recent years, and in March stood at 3.1 percent. Officials at the Fed maintain that rates at the current range of 3.5 percent to 3.75 percent are only marginally weighing on the economy.

How Mr. Warsh perceives the Fed’s current policy settings will be crucial to understanding his appetite for lower rates.

How sticky will inflation be?

Officials on Wednesday are expected to sharply revise higher their forecasts for inflation in light of the war with Iran. In March, just weeks after the onset of the conflict, policymakers expected “core” inflation, which strips out volatile food and energy items, to rise to only 2.7 percent by the end of the year.

As of April, this measure of underlying inflation, according to the Fed’s preferred Personal Consumption Expenditures price index, stood at 3.3 percent. Overall P.C.E. inflation has shot higher to 3.8 percent.

An end to the conflict in the Middle East will help to ease inflationary pressures, but it will not eliminate them. Officials are most concerned about Americans losing faith that inflation will eventually return to 2 percent, the Fed’s longstanding target.

The longer officials miss on their target — as they have done for five years — the more pronounced that risk becomes.

As the president’s long-awaited, handpicked Fed chairman, Mr. Warsh must navigate the economic headwinds — and the many political risks — that come with serving in Mr. Trump’s second term. Like his predecessor, Mr. Warsh is bound to face the unyielding attention of the man who nominated him, and could similarly find himself on the receiving end of fierce and public pressure to lower rates.

In some ways, the task for Mr. Warsh is laid bare by the unusual circumstances in which he inherited the job.

Mr. Trump nominated Mr. Warsh back in January, amid months of unusually aggressive White House attacks on the Fed and its members. The president openly courted a roster of loyalists at the central bank, and he repeatedly flirted in public with the idea of firing Mr. Powell, despite having elevated him to the job during his first term.

At political rallies and on social media, Mr. Trump savaged Mr. Powell, while the president’s deputies investigated the Fed chair, an inquiry that a judge would later find to be politically motivated. And Mr. Powell was not alone: Mr. Trump also tried to oust another Fed member, Lisa D. Cook, in a case that would eventually reach the Supreme Court. (The justices could render a verdict in that case as soon as this week.)

The meddling often spooked markets, angered lawmakers from both parties and cast a shadow of doubt over Mr. Warsh before he could even take the job at the Fed, where he previously served as a governor. It forced Mr. Warsh to face uncomfortable questions from Congress about his ability to resist Mr. Trump’s demands.

At a tense confirmation hearing in April, Mr. Warsh repeatedly tried to convince lawmakers that Mr. Trump had “never asked me to predetermine, commit, fix, decide on any interest rate decision in any of our discussions, nor would I ever agree to do so.” Many Democrats remained unconvinced, and later opposed Mr. Warsh’s confirmation, which the Senate delivered in May.

That largely party-line vote afforded Mr. Trump his long-sought, new Fed leader precisely at a moment when the central bank seemed least inclined to deliver on his demands for lower interest rates. In fact, Mr. Warsh’s first meeting, which began Tuesday, came as economists continued to debate the odds of a rate hike, with prices now rising at their fastest clip in over three years.

Mr. Warsh is set to announce the Fed’s next rate decision on Wednesday in the same setting that frequently compelled Mr. Trump’s to issue his fiercest public criticisms against Mr. Powell.

The president, for his part, has hinted in recent weeks that he may dial back some of the pressure on his newly confirmed chair. At a swearing-in ceremony for Mr. Warsh last month, the president said he wanted his new Fed chair to be “totally independent” when it came to setting interest rates.

“Don’t look at me,” Mr. Trump said. “Don’t look at anybody. Just do your own thing and do a great job.”

A former inflation hawk

Mr. Warsh, 55, is no stranger to the Fed. He served at the central bank from 2006 to 2011 after being installed by President George W. Bush. While at the Fed, Mr. Warsh established himself as a so-called inflation hawk, who was worried about price pressures and urged higher interest rates.

The view continued even amid the 2008-09 financial crisis and the Great Recession. While the Fed slashed interest rates, Mr. Warsh warned that the central bank risked exacerbating price pressures if it continued to cut rates, a tool he called “the hammer.”

“Even if the economy were to weaken somewhat further, we should be inclined to resist expected, reflexive calls to trot out the hammer again,” he said in May 2008.

Mr. Warsh, a financier who was the Fed’s chief liaison to Wall Street during the financial crisis, played a central role in the bank’s broader response — including helping to broker the sale of Bear Stearns to JPMorgan Chase and arranging the federal government’s bailout of American International Group, the insurance giant.

Under pressure to lower rates

More recently, Mr. Warsh has publicly backed the need for lower interest rates, which President Trump has demanded. But the war with Iran has complicated the picture by driving up oil prices and stoking renewed inflation fears. In his confirmation hearings in April, he stopped short of endorsing an immediate rate cut.

Still, Mr. Warsh has downplayed concerns that Mr. Trump’s tariffs will lead to persistently higher inflation. And he has argued that artificial intelligence could lead to faster productivity growth, allowing the Fed to keep interest rates lower without accelerating inflation.

Mr. Warsh has argued that his current openness to lower rates is consistent with his earlier stance. He wants the Fed to reduce its holdings of bonds — currently worth more than $6 trillion — which he says would allow it to cut rates without causing inflation to rise. But few mainstream economists endorse that view.

Former Wall Street banker

Mr. Warsh began his career working in Morgan Stanley’s mergers and acquisitions department. He helped structure deals and advised companies “across a range of industries, including manufacturing, basic material, professional services and technology,” according to the Fed’s website.

He also “helped structure capital markets transactions and facilitated fixed income and equity financing,” according to the Fed.

Lauder family ties

Mr. Warsh is married to Jane Lauder, daughter of Ronald Lauder, who is the heir to the Estée Lauder Companies. Mr. Lauder, one of the richest men in New York, has known Mr. Trump since college and was instrumental in planting the idea in Mr. Trump’s mind of buying Greenland.

“A friend of mine, a really, really experienced businessman, thinks we can get Greenland,” Mr. Trump is said to have told his national security adviser. “What do you think?”

A second chance as chairman

Mr. Warsh has made no secret of his interest in leading the Fed. He narrowly missed out on the job during Mr. Trump’s first term, ultimately losing out to Jerome H. Powell. Mr. Trump has suggested that he regretted the choice after Mr. Powell refused to deliver the big rate cuts that he wanted.

When Mr. Trump returned to the White House last year, Mr. Warsh immediately emerged as a leading candidate for the job. Other candidates at times seemed to edge ahead of him in the running, including Kevin Hassett, Mr. Trump’s top economic adviser. But after a long and very public search process, Mr. Warsh finally landed the nomination. He was confirmed to the post last month.

In a brief speech following his swearing-in, Mr. Warsh promised to lead a “reform-oriented Federal Reserve” but didn’t identify any specific changes he plans to make.

Mr. Warsh has criticized his predecessor, writing in The Wall Street Journal that “inflation is a choice” and that Mr. Powell’s track record was “one of unwise choices.” In an interview on CNBC this year, he called for “regime change” at the central bank and has said that policymakers, including Mr. Powell, undermined their credibility by responding too slowly to the surge in inflation coming out of the Covid-19 pandemic.

That could make for some awkward moments at this week’s meeting — Mr. Powell, in a break with recent precedent, stayed on as a Fed governor after reaching the end of his term as chair.

Here’s everything you need to know about the balance sheet and why the new Fed chairman wants it to be smaller:

What’s on the Fed’s balance sheet?

The Fed’s balance sheet reflects its assets and liabilities.

Its assets include over $4 trillion in Treasury securities and $2 trillion in mortgage-backed securities amassed in past crises as an attempt by the Fed to keep a lid on rates and support the economy.

Its liabilities include extra cash deposits that more than 5,000 banks hold at the central bank, otherwise known as reserves. The amount of reserves fluctuates with the amount of assets the Fed holds. Currency in circulation and the Treasury’s cash coffers represent the central bank’s other major liabilities. At its peak in 2022, its balance sheet totaled nearly $9 trillion.

Why is the balance sheet so large?

The Fed began buying large amounts of government debt and mortgage-backed securities during the global financial crisis. The central bank had already slashed short-term interest rates to near zero, but the economy and financial system were still under acute pressure.

So the Fed engaged in what’s known as “quantitative easing” (QE) — a program that sought to lower long-term interest rates by buying up large amounts of financial assets.

Mr. Warsh, who was a Fed governor during the financial crisis, was publicly skeptical of quantitative easing. He ultimately resigned from the Fed in 2011 over disagreements related to how much the central bank was relying on this tool.

The crisis fundamentally changed the Fed’s relationship with financial markets. Since 2008, the Fed has operated an “ample reserves” system to carry out its monetary policy. That entails the Fed supplying more than enough reserves to meet banks’ demands and paying interest on those holdings to create a “floor” for borrowing costs. When the Fed changes the target range of its main policy rate, it either raises or lowers the interest it is paying on those holdings such that rates across the financial system shift accordingly. Before the financial crisis, reserve balances were significantly lower and the Fed was not paying out interest, requiring frequent interventions to ensure supply and demand balanced out.

Last year, reserves dipped below $3 trillion following a three-year period in which the Fed reduced its holdings. Strains soon emerged in short-term markets, where banks and hedge funds borrow cash overnight for trading and to cover daily payments. The Fed reversed course, and in December began buying Treasury bills, which mature in one year or less.

Why does Warsh want to shrink the balance sheet?

According to Mr. Warsh, the Fed’s decision to expand its portfolio by so much and so quickly since the 2008 global financial crisis has stoked inflation, worsened inequality and distorted the process of how financial assets are priced. The growing size of the investments on its balance sheet has jeopardized the Fed’s own independence by treading into territory far outside its congressional mandate, he believes. And it has made Wall Street overly reliant on the Fed, creating an unhealthy expectation that the central bank will always be ready to ride to the rescue.

Mr. Warsh’s plan to rectify this appears, on the surface, relatively straightforward. He wants the Fed to have a smaller footprint in financial markets and for there to be closer coordination with the Treasury Department on what the Fed holds in its portfolio and what the government issues in terms of debt to fund itself. Mr. Warsh has argued that reducing the central bank’s holdings will give officials space to lower interest rates, something President Trump has long desired. The rationale is that longer-term rates are likely to rise as the balance sheet shrinks, which then could be offset by lowering short-term rates.

How would Warsh shrink it?

Efforts to shrink the balance sheet in the past have caused significant panic in financial markets. The last major episode was in 2019, when policymakers reduced the balance sheet by too much, causing short-term interest rates to spike. Even as recently as last year, the Fed had to deal with fresh volatility, prompting it to start buying short-dated Treasuries again.

Mr. Warsh is cognizant of the potential pitfalls of his balance sheet ambitions, telling lawmakers at his confirmation hearing that there would be an extensive debate before proceeding slowly with advance notice to markets.

While Mr. Warsh declined to say how much smaller he wanted the overall balance sheet to be, he made clear that the Fed should no longer be holding long-term Treasuries, given his concerns that doing so blurs the line between monetary and fiscal policy by suppressing the government’s borrowing costs.

Discussions around reducing the balance sheet have multiplied since Mr. Warsh’s ascent to Fed chairman. For some, the objective itself is questionable. Those in this camp argue that the current system works well because it is simple, requires minimal intervention and allows for the Fed to maintain a firm grip on rates.

One of the most vocal detractors of a significantly smaller balance sheet has been Christopher J. Waller, a governor who at one point competed with Mr. Warsh for the top job.

“You don’t want banks every night of the day digging around in the couch cushions looking for money,” he said at a conference this year. “This is massively inefficient and stupid.”

What he has conceded, however, is that there is a path to reducing banks’ demand for reserves as a mechanism to shrink the balance sheet that would not jeopardize the Fed’s current system for enacting monetary policy.

Recent research points to several ways to achieve that. The most popular path revolves around altering regulations to reduce banks’ need to hold reserves.

Mr. Warsh is cognizant of the potential pitfalls of his balance sheet ambitions, telling lawmakers at his confirmation hearing that there would be an extensive debate before proceeding slowly with advance notice to markets. That echoed Treasury Secretary Scott Bessent, who said it could take up to a year for the Fed to make any balance sheet decisions.

“As has been the case in recent months, consumer credit behavior is likely to remain influenced more by persistent affordability pressures than by modest movements in borrowing costs,” said Michele Raneri, vice president and head of U.S. research at TransUnion, one of the three big credit reporting companies. “Elevated essential expenses, particularly those tied to energy, continue to strain household budgets and contribute to ongoing financial uncertainty.”

While many higher income Americans have seen their finances improve, people in less favorable positions are turning to credit to cover any shortfalls. For consumers with below-average credit scores, monthly debt payments represent 14.1 percent of their gross monthly income at the end of March, up from 12.8 percent at the end of 2019, according to a data analysis from TransUnion. (That includes debt like credit cards, auto loans, personal loans and student loans, but excludes mortgages.)

For Americans with better but not quite prime scores, debt payments consume 16.2 percent of their income, up from 14.7 percent over the same time period. Both consumer groups generally pay higher interest rates than those with more pristine credit scores.

Many of those rates are pegged to the Fed’s actions. The latest meeting is the first with Kevin M. Warsh as the central bank’s chairman — and many people will be looking for signals about the Fed’s potential direction with him at the helm.

The economic outlook is still murky. Oil prices surged in February in the wake of the U.S.-Israeli-led war with Iran, reigniting inflation, which the Fed had already been struggling to bring back to its 2 percent target. The job market had been softening, but strengthened recently. The conflicting signals have complicated the Fed’s job, which is to keep prices relatively stable and unemployment low.

After a series of rate reductions last year, the Fed paused its cuts and is expected to keep rates at a range of 3.5 to 3.75 percent.

Here’s where various consumer rates stand now:

Mortgage Rates

Rates on 30-year fixed mortgages don’t move in tandem with the Fed’s benchmark rates; instead, they generally track with the yield on 10-year Treasury bonds, which is influenced by factors, including the Fed’s actions, expectations about inflation and investor sentiment.

Mortgage rates have been volatile. In late February, they fell below 6 percent for the first time in more than three years, but they reversed course after the U.S.-Israeli attacks on Iran, given the likelihood of higher inflation. That sent yields on the 10-year bond higher, which, in turn, pushed up mortgage rates.

In recent weeks, mortgage rates have been trending higher again: The average rate on a 30-year fixed mortgage was 6.52 percent as of June 11, according to Freddie Mac, up from 6.48 percent the week before, but lower than 6.84 percent a year ago.

Other home loans are more closely tethered to the central bank’s decisions. Home-equity lines of credit and adjustable-rate mortgages, which carry variable interest rates, generally adjust within two billing cycles after a change in the Fed’s rates.

Credit Cards

Cardholders carrying balances have seen the rates they pay on their debt decline ever so slightly over the past several months, but not enough to meaningfully affect their monthly budgets. (When the Fed cuts rates, card issuers are generally slower to act, and changes could take a couple of billing cycles.)

Last week, the average interest rate on credit cards was 19.56 percent, according to Bankrate, which tracks more than 100 popular new card offerings by the largest 50 banks. That’s down from 20.79 percent in August 2024, the highest rate since 1985.

Auto Loans

Higher car prices, combined with elevated loan rates, continue to strain affordability for many Americans, while many lower-income households are struggling to make payments on the auto loans they already hold.

Many car loans tend to track the yield on the five-year Treasury note, which is influenced by the Fed’s rate moves. But other factors determine how much borrowers actually pay, including credit history, the type of vehicle, the loan term and the down payment. Lenders also consider the levels of borrowers becoming delinquent on auto loans. As those move higher, so do rates, which makes qualifying for a loan more difficult, particularly for people with lower credit scores.

The average rate on new car loans was 6.9 percent in May, according to Edmunds, an auto research and shopping website, up from 6.5 percent at the end of last year but down from 7.3 percent in May 2025.

Rates for used cars were higher: The average loan carried a 10.4 percent rate in May, marginally lower than 10.5 percent at the end of the year but down from 11.0 percent in May 2025.

Savings Accounts

Everything from online savings accounts and certificates of deposit to money market funds tend to generally move in line with the Fed’s policy changes. High-yield savings accounts have fallen a bit from their most recent highs roughly two years ago, but they still pay far more than rates for traditional savings accounts, which remain anemic.

The national average savings account rate was recently 0.61 percent, according to Bankrate, while the best high-yielding savings accounts pay around 4 percent.

The average yield on the Crane 100 Money Fund Index, which tracks the largest money-market funds, was 3.45 percent as of June 15, down from 3.73 percent on Dec. 9 and 5.13 percent at the end of last June.

Student Loans

There are two main types of student loans: federal and private.

Most people turn to federal loans first. Their interest rates are fixed for the life of the loan, they’re easier for teenagers to get and the repayment terms are more generous. These rates reset on July 1 each year and follow a formula based on the 10-year Treasury bond auction in May.

And they just moved higher (for money borrowed from July 1 through June 30, 2027): Undergraduate loans now carry a rate of 6.52 percent, down from 6.39 a year earlier. Rates on loans for graduate and professional students rose to 8.07 percent from 7.94 percent, while rates on PLUS loans — extra financing available to graduate students and to parents of undergraduates — increased to 9.07 percent from 8.94 percent.

Private student loans are more of a wild card. Undergraduates often need a co-signer, rates can be fixed or variable, and much depends on your credit score.

That cheeriness has faded.

The monthslong war with Iran pushed up the cost of fuel and other materials. Inflation has accelerated. The prospect of further interest rate cuts before the end of the year is dimming.

Even as large corporations are posting solid earnings and the stock market is booming, small-business sentiment has plummeted in recent months. Lacking the funds to withstand an onslaught of financial gyrations, many smaller companies are instead rethinking their hiring and pausing any plans to expand — again.

The National Federation of Independent Business reported in May its lowest measure of economic expectations since Mr. Trump was elected to his second term. The Bank of America Institute reported that small-business profitability in April grew at its slowest pace in two years. Job openings at small companies have flatlined. On Sunday, Mr. Trump and Iranian officials announced a preliminary deal to end the war, though the economic consequences will probably linger for some time.

“It has been an incredible challenge for a small mom-and-pop operation to just simply keep the doors open,” said Bruce Jovaag, the owner of Norse Construction, a home remodeling company in Fenton, Mo., that he started in 2013. “It has been a fight like has never existed before.”

Mr. Jovaag, who is 68, said that he had loved the creative aspects of redesigning kitchens, bathrooms and other interior spaces, and that he had formed many meaningful long-term relationships with customers. But seemingly endless disruptions since the Covid-19 pandemic have “taken the enjoyment out of what I do for a living,” he said.

High interest rates slowed the housing market and deterred homeowners from renovating. Immigration enforcement exacerbated a worker shortage in the construction industry. Tariffs swelled the cost of plywood and other building materials. Last year, Mr. Jovaag’s sales, around $1 million in a good year, were down nearly 25 percent.

Although he received a $3,000 tax refund this year, that did not offset the $10,000 of his savings he put into the business last year to keep it afloat. Soaring gas prices, which have made driving to job sites more costly, have eaten further into his profits.

“It’s been a nightmare,” he said. “I’m ready to retire.”

The health of small businesses is critical to the American economy because they power employment and growth. Businesses with fewer than 500 employees account for nearly half of all employment and 55 percent of job creation, according to the Census Bureau.

Many owners were optimistic that the Trump administration would slash taxes and reduce regulations. Legislation that Mr. Trump signed into law last July made permanent the 20 percent tax deduction on business income for many owners. It also allowed them to deduct the cost of certain business investments all at once.

“America First policies are restoring the American dream on Main Street to new heights,” Kelly Loeffler, the head of the Small Business Administration, said last month during a small-business summit at the White House.

That hasn’t been the reality for the small-business owners who are still reeling from years of challenges, some of which have been compounded by tariffs and other policies introduced during Mr. Trump’s second term.

The persistent pressure has pushed some small businesses to the brink. Businesses with fewer than 10 workers have broadly been shedding employees for much of the past five years, according to data from QuickBooks, the accounting software company.

Bankruptcy filings for small businesses also rose last year in a pattern that suggested they were tied to tariff-related economic stress, said Edith Hotchkiss, a finance professor at Boston College. Using data from New Generation Research, a bankruptcy research firm, she found that bankruptcies for firms with less than $50,000 in liabilities had increased two to four months after the administration imposed new import duties.

“Prices are higher, and these small businesses don’t have the flexibility that larger firms do,” she said. “They don’t have the existing inventories that larger firms might have.”

“It’s only natural that these would be maybe the most vulnerable,” she added.

More recently, skyrocketing energy prices have ratcheted up the pain. Since the war in Iran began more than three months ago, a constrained supply of oil has resulted in higher fuel prices, which have raised the cost of transportation, shipping and some materials.

Wholesale prices — what businesses pay for goods and services — rose 1.1 percent in May and were up 6.5 percent from a year earlier, according to the Bureau of Labor Statistics. The 12-month increase was the fastest since November 2022, evidence that elevated energy prices were working their way through the supply chain.

In a survey conducted in May and early June by the Small Business Majority, a nonprofit, three-quarters of business owners said the increases in fuel and transportation costs had affected them. More than a third said they had frozen hiring because of changes to expenses and other economic conditions this year, and roughly one in 10 had laid off workers.

Cost pressures, including higher energy prices, are “definitely the problem that we’re hearing most about right now,” said Holly Wade, the executive director of the National Federation of Independent Business’s research center.

Unlike tariffs, which have often been absorbed at least in part by wholesalers and suppliers, higher oil and gas prices are pummeling many small businesses directly.

“It’s really hitting their bottom line, and they’re having to pass those costs onto customers pretty quickly,” Ms. Wade said.

Francesca Costa, who with her fiancé runs a cafe in Houston called Cranky Carrot Juice, is among the business owners making difficult choices because of rising prices.

When she ran out of the tea that her company uses to make kombucha, she turned to a farm in Ecuador. She purchased about 100 kilograms for $440.

Getting the tea to Houston was another story. Shipping it by air was more expensive than she anticipated because of higher fuel prices. Import duties packed on cost. She said she had spent almost $1,000 on shipping and customs fees.

The cost of eggs and bacon that the company buys from local suppliers has also gone up. Shipping costs on glass bottles that it uses for juices have tripled.

Higher prices, along with expenses associated with opening a second location in downtown Houston in February, have pushed Ms. Costa and her fiancé to consider whether to keep the business going. She has already raised menu prices once this year — cold-pressed juices by 50 cents, smoothies by $1 — and is hesitant to do so again when consumers are pulling back spending on discretionary items like premium health food.

“We are very worried,” she said. “It is a very real possibility that we could also have to close.”

The coming months could bring some relief.

Energy prices are expected to fall if the war with Iran ends. And the labor market appears to be emerging from its period of stagnation, which could help small businesses that can respond nimbly to rising demand.

Gusto, a small-business payroll and benefits platform, said companies using its services had added 83,900 jobs in May, the fourth month in a row of hiring. Job growth occurred in nearly every sector.

These businesses “are looking at the future and seeing some sort of opportunity for themselves,” said Nich Tremper, a senior economist at Gusto.

Kirsten Davenport-Norwood, who owns Greene Thumb Landscape in Indianapolis, has seen the cost of mulch, concrete paving slabs and other materials balloon. Her clients include apartment complexes, parks and schools. Government budget cuts have meant that some that rely on funding have been unable to pay for services on time.

Last year, Ms. Davenport-Norwood and her husband, who together took over the business after her mother died four years ago, had to use their personal savings to pay workers because the company’s cash flow was so tight.

Ms. Davenport-Norwood is nervous about gas prices and the broader economic climate. For now, though, demand has held steady. There is “always grass to be mowed,” she said. She has jobs booked through August.

“I’m feeling really good about our organization right now,” she said.

A decision by Mr. Warsh to downplay price pressures and talk up rate cuts would generate significant pushback from several of his new colleagues. It would also raise questions about his commitment to eventually returning inflation to the Fed’s 2 percent target. Talking tough on inflation and keeping open the option of rate increases would help to burnish his credibility but risk angering President Trump, who has not wavered in his desire for lower interest rates.

Mr. Warsh’s pledge to recast how the Fed communicates adds yet another complication. He thinks policymakers should speak less frequently and resist providing signals about what the central bank might do next with rates. This so-called forward guidance boxes the Fed in, Mr. Warsh has argued, making it harder for central bankers to pivot if necessary.

Mr. Warsh will do his best on Wednesday to avoid providing a steer in either direction — an approach that risks injecting an added dose of volatility into markets already bracing for a rate increase around year-end.

“Just given the novelty of the moment, because it’s Warsh’s first press conference, there’s really a lot of scope for what you might call a ‘market misinterpretation’ of his message,” said Kris Dawsey, head of economic research at the D.E. Shaw Group, a hedge fund. “It’s going to take some time for the market to really get calibrated on his communications.”

Warsh’s Debut

The Fed on Wednesday is set to hold rates steady at a range of 3.5 percent to 3.75 percent for a fourth straight meeting.

The policy statement that will accompany the rate decision is likely to scrap what officials have described as an “easing bias,” a stance that suggests a rate reduction is the most plausible next move. It generated significant opposition at the last meeting in April.

What will be hard to immediately discern is if the changes to the statement reflect growing support within the Fed to consider rate increases or if it is simply a byproduct of Mr. Warsh’s longstanding objection to forward guidance.

The statement on Wednesday will be accompanied by the “dot plot,” which aggregates what all 19 policymakers surmise will happen to rates over the coming years. The central bank also publishes what it expects to happen to inflation, unemployment and growth over that same time horizon.

One of Mr. Warsh’s first decisions as chairman revolves around whether he will provide his own projections. Opting out of the process would align with his past criticism of the dot plot and his vow to lead a “reform-oriented” Fed. It would also help to shift the focus away from what Ellen Meade, who was a senior adviser to the Fed’s board of governors until 2021 and is now a professor at Duke University, described as the “ridiculousness of microscoping the dots.”

But there could be drawbacks. “To not do so would look like a spiteful dissent against his own committee,” said Michael Feroli, chief U.S. economist at J.P. Morgan.

It is this group of policymakers that Mr. Warsh will need to persuade if he is to make progress on the changes he wants to enact, including shrinking the Fed’s $6.7 trillion portfolio of government bonds and mortgage-backed securities.

Modifications to the cadence or the content of what the Fed publishes in terms of officials’ forecasts do not require final approval by the committee, said Kurt Lewis, who served as a senior adviser to Jerome H. Powell while he was Fed chair.

But Mr. Lewis stressed that making these changes unilaterally would be a break with tradition. In the past, such alterations have occurred only after extensive deliberation until a consensus was reached, even if the support was not unanimous in the end. That was the case in 2012 when the Fed began publishing officials’ rate projections.

With or without Mr. Warsh’s forecast on Wednesday, most officials are poised to scale back their expectations for rate cuts from estimates three months ago. As a result, the median estimate is expected to at a minimum show no cuts by year-end rather than the quarter-point reduction that was previously forecast. A number of officials are likely to pencil in a rate increase, reflecting what is expected to be a significant revision higher in the inflation forecast.

High Bar for a Hike

Still, the case for an immediate rate increase is not obvious.

Prices for goods and services have risen sharply since the onset of the war with Iran. But the effect so far on “core” inflation, which strips out volatile food and energy prices, has been more subdued, suggesting that the Middle East conflict has not yet caused significant spillover. In May, core inflation rose just 0.2 percent, according to the latest Consumer Price Index report, or 2.9 percent from the same time last year.

The announcement of a truce on Sunday, and the expected resumption of shipping activity through the crucial Strait of Hormuz, has had an immediate effect on energy markets. The price of Brent crude, the global benchmark for oil, fell to a roughly three-month low of $83 a barrel on Monday. Gasoline prices tend to trail fluctuations by a few days.

The labor market, despite strengthening in recent months, is also not a source of inflation, said Richard Clarida, a former Fed vice chair who is now a global economic adviser at the investment giant PIMCO. Unemployment is stable, businesses are hiring at a faster pace and some workers are getting raises, although the bulk of those wage gains has been wiped out by the recent bout of inflation. All of this has occurred as overall productivity has picked up, easing pressure on employers.

“I continue to think that the bar for a rate hike is high, but obviously not insurmountable,” Mr. Clarida said.

That would quickly change if there were signs that Americans were beginning to lose faith in the Fed’s eventually returning inflation to 2 percent — a growing risk in light of recent shocks.

Even before the war with Iran, progress toward that target had stalled. Mr. Trump’s tariffs had driven up prices, while costs for services like hospitality and transportation stayed unexpectedly high.

Expenses related to the boom in artificial intelligence have soared as well, leading to “inflation straight out of Econ 101 with demand exceeding supply,” David Seif, an economist at Nomura, said. Mr. Warsh has argued that the proliferation of A.I. will be “structurally disinflationary” and in turn carve out space for the Fed to cut rates. But his new colleagues appear highly skeptical about that rationale against the current backdrop.

A New Approach

For Mr. Warsh, the Fed’s focus should be trained on big, fundamental questions such as how A.I. might transform the economy, and filtering economic data through that kind of lens rather than getting bogged down in debates about what could happen to rates in the next six weeks.

“There’s a little bit of an imbalance of focusing so much on the bumps and wiggles from month to month that are very hard to predict and are pretty much noise filled,” said Randall S. Kroszner, a University of Chicago economist who served as a governor at the central bank alongside Mr. Warsh.

That emphasis, Mr. Warsh has argued, has contributed to a cacophony of opinions from Fed officials that often results in mixed signals and miscalibrated policy settings.

But it is improbable that Mr. Warsh will be able to significantly curtail how much other policymakers are speaking, although he will have the latitude to shape the substance of what they are debating.

Officials will also have even greater incentive to speak out if they do not feel that Mr. Warsh is representing the committee’s view at the news conferences held after each of the eight policy meetings a year. At his confirmation hearing, Mr. Warsh noted that, legally, the central bank did not need to have as many meetings, but stopped short of endorsing any reduction.

Mr. Lewis, Mr. Powell’s former adviser, who is now the head of central bank policy at the investment bank Piper Sandler, warned that markets could seize up if Mr. Warsh wound back the Fed’s communications too significantly and opted to skirt specifics at Wednesday’s news conference.

“Less communication is not necessarily less information, but if it is legitimately meaningfully less information, you should expect there to be a higher uncertainty about how policy works and therefore greater volatility,” Mr. Lewis said.