Fed Rate Hike Decision Tests Trump-Warsh Truce

The Federal Reserve is facing pressure to raise interest rates, but this move would test the truce between President Trump and Fed Chairman Kevin Warsh.

Warsh's arrival at the Fed ended Trump's war with the central bank. However, a rate hike would put their relationship to the test.

The case for raising rates has strengthened since Warsh took over in May. The ongoing war with Iran and new tariffs have pushed energy prices higher, adding to inflationary pressures.

New Fed President Kevin Hassett said on television that inflation is improving and the Fed doesn't need to raise rates. However, he also acknowledged that Trump wouldn't be 'super happy' about a rate increase.