Fed Stuck Between Trump's Wrath and Market Criticism

The Federal Reserve is facing a dilemma as it prepares to make its policy decision this week. The central bank must choose between hiking interest rates, which would risk incurring the ire of President Donald Trump, or holding rates steady and risking further criticism from the markets for being out of touch.

The market's expectations are already high, with a near-certain hike by 25 basis points on Wednesday priced in. The probability of another December hike is now at 75%.

The rising 10-year Treasury yield has added to the pressure on the Fed and Chair Kevin Warsh to target inflation, which remains above the 2% target. The yield has risen to its highest level since 2007, crossing the psychological 5% level in early trading on Tuesday.