Fed Rate Hike Looms as Trump Demands Cut
The US Federal Reserve is likely to raise interest rates for the first time in about three years, sparking concerns of a clash between Fed Chairman Kevin Wash and President Donald Trump.
A recent survey by the Chicago Mercantile Exchange's (CME) FedWatch shows that the probability of a 0.25 percentage point rate hike at the Federal Open Market Committee (FOMC) meeting from the 15th to the 16th is around 70%, up significantly from before the release of the recent price index.
This would mark the first rate hike since July 2023, and a shift back to tightening after three consecutive rate cuts in the second half of last year. US Treasury yields also jumped as the Fed's potential for further tightening was highlighted, with the 10-year yield exceeding 5% for the first time since October 2023.
Market watchers are closely watching the possibility of a conflict over monetary policy between Chairman Wash and President Trump, who has demanded a rate cut. If Chairman Wash freezes interest rates in consideration of the White House's demands, it could undermine the Fed's institutional credibility and willingness to respond to inflation.