US Federal Reserve Faces Crucial Rate Decision Amid Inflation Fears

The US Federal Reserve is set to make a key decision on interest rates this week, with markets expecting a rate hike to tackle high inflation. The Fed's two-day meeting will conclude on Wednesday, and analysts say central bank chief Kevin Warsh's credibility is on the line.

Despite holding rates steady since January, several Fed policymakers have hinted that if inflation doesn't show signs of slowing, they'll raise interest rates. New data on consumer inflation for August showed it remaining steady at 3.4 per cent, still above the Fed's long-term target of two percent.

Market expectations of a 25-basis-point rate hike surged in the wake of the data, with the probability at more than 85 per cent according to CME's FedWatch tool. Trump has railed against the Fed over interest rates since taking office, launching unprecedented attacks on the central bank's independence.