Federal Reserve Defies Trump, Expects Rate Hike Amid Stubborn Inflation

The Federal Reserve is expected to raise its benchmark rate for the first time in three years on Wednesday, despite President Donald Trump's demands for a cut. The decision would put the central bank at odds with the president's support for lower interest rates.

A quarter-point increase in the Fed's rate, currently about 3.6%, is not guaranteed due to the lack of clear signals from Fed Chair Kevin Warsh. However, most analysts and economists expect a hike after Warsh's speech two weeks ago at the Fed's annual conference in Jackson Hole, Wyoming, where he argued that the Fed had not yet achieved its goal of putting inflation in check.

Warsh has been warning about inflation intolerance, and recent data shows prices remain stubbornly high. The Iran war has contributed to higher oil and gas prices, which is likely to keep inflation above the 2% target for longer.