Fed Set to Raise Rates Despite Trump Pressure

Federal Reserve Chair Kevin Warsh faces a dilemma as he prepares to announce the central bank's interest rate decision on Wednesday. Financial markets expect an increase, while US President Donald Trump wants rates cut or left unchanged.

Economists largely agree that the Fed will follow market consensus and raise rates, despite Trump's calls for action. The Fed's target range would rise from 3.5%-3.75% to 3.75%-4%, with a quarter-point increase expected by around 90% of futures markets.

Warsh has already signaled his intention to address inflation, which remains above the central bank's 2% target. The latest inflation figures show price pressures persisting, and mortgage rates have increased in response to rising Treasury yields.

Experts warn that failing to raise rates could damage the Fed's credibility with investors. 'That is the paradox: A hike now could lower long-term rates later,' said Diane Swonk, chief economist at KPMG.