Fed Defies Trump: Rate Hike Expected Despite White House Demands

The Federal Reserve is expected to raise its benchmark rate on Wednesday for the first time in three years, defying President Donald Trump's demands for a cut. The move would be aimed at fighting stubbornly high inflation, which has been a concern for the central bank. Fed Chair Kevin Warsh has argued that the Fed had not yet achieved its goal of putting inflation in check.

Warsh made this argument in a speech two weeks ago at the Fed's annual conference in Jackson Hole, Wyoming. He stated that recent inflation reports 'do not tell me that underlying trends have improved,' adding that if such improvement wasn't seen soon, 'we have work to do.'

The rate increase would be a quarter-point hike, bringing the benchmark rate to around 3.75%. This move is widely expected by analysts and economists, with a 90% chance of it happening according to futures prices.

However, some members of the Fed's interest-rate setting committee may not feel that a rate hike is necessary, as they expect inflation to fade over time. Warsh has not made this argument, instead emphasizing the need for action to combat inflation.