Fed Set to Hike Rates Despite Trump's Demands
The Federal Reserve is expected to raise its benchmark interest rate on Wednesday for the first time in three years, despite President Donald Trump's demands for a cut. The move would put the central bank at odds with the president's support for lower rates.
A quarter-point increase in the Fed's rate, currently around 3.6%, is widely anticipated after Federal Reserve Chair Kevin Warsh argued that the central bank had not yet achieved its goal of putting inflation in check. Analysts and economists expect a hike despite Warsh's reluctance to provide clear signals about next moves.
The increase would be a sharp shift for the economy and financial markets, which have been volatile due to rising oil prices caused by the Iran war. Inflation is likely to remain higher than the Fed's 2% target for longer, making a rate hike necessary to combat stubbornly high inflation.