Warsh Defies Trump, Raises Interest Rates Amid Surging Inflation

US Federal Reserve Chair Kevin Warsh delivered an interest rate hike of 25 basis points to between 3.75 and 4.00 percent, despite pressure from President Donald Trump.

The move defied Trump's demands for lower rates to spur economic activity, but was seen as necessary by many economists due to surging inflation, which has been above the Fed's two-percent target for more than five years.

Warsh defended the Fed's independence, stating 'Part of the independence of the Federal Reserve is we stay in our lane. Independence is a two-way street.'

Economist Pao-Lin Tien questioned Warsh's independence due to Trump's assertion that he spoke with Warsh before the meeting and told him to 'do what you want', ascribing the decision to raise rates to a 'hostile board'. The Fed chair remained tight-lipped about his conversation with Trump.

Others, such as David Wessel, a senior fellow at the Brookings Institution, saw Warsh's actions as a sign of his independence and ability to make tough decisions, stating that 'We don't know what was really said in that conversation. Warsh isn't talking and Trump isn't a reliable narrator.'