Trump vs Fed: Interest Rate Hike Decision Sparks White House Tension

The US Federal Reserve is set to make a crucial decision on interest rates this Wednesday. The meeting comes as inflation stands at 3.4% in August, far from the 2% target. Markets and investors expect a quarter-point increase, with a probability of over 90%, according to Fedwatch CME.

However, this decision clashes with President Donald Trump's wishes. Trump had pushed for Kevin Warsh's appointment as Federal Reserve president and is now threatening to cut off trade with countries that have a trade deficit if the Fed does not lower interest rates. The current interest rate range is between 3.50% and 3.75%, which has been maintained since July.

Warsh faces a difficult decision, one that could impact his credibility as Federal Reserve president. With inflation running higher than target, raising interest rates would be a typical response to combat rising prices. But doing so would go against Trump's demands, creating a tense situation between the Fed and the White House.