Fed Set to Raise Rates Amid Trump Pressure
The Federal Reserve is set to raise interest rates at its upcoming meeting, despite pressure from President Donald Trump to keep them low. The market has priced in a 25-basis point hike and two more similar moves between now and June next year.
Trump's trade wars and Middle East conflict have driven up inflation, with the headline rate rising to 3.4% last week. This is above the Fed's 2% target for five and a half years.
The war in the Middle East has caused oil prices to surge, with gasoline prices increasing by 45% and diesel prices by 60%. The average price of diesel has surpassed $6 per gallon for the first time.
Fed chair Kevin Warsh is in an awkward position, as Trump handpicked him but his decisions have also contributed to the situation. Warsh's credibility and independence from the White House are at stake if he doesn't raise rates.