Warsh May Not Grant Rate Hike as Traders Overwhelmingly Expect It

The Federal Reserve is expected to raise interest rates this week, but some are questioning whether it's the right move. Markets have priced in an 86.5% likelihood of a 25 basis point hike, making it seem like a done deal.

However, Kevin Warsh, a vocal critic of the Fed's forward guidance policy, may not be convinced. He has consistently said he wouldn't participate in such guidance, and now traders are calling for higher rates. If he skips the rate hike, it could reignite questions about his credibility.

The data on inflation is not as clear-cut as it seems. Gasoline prices rose 3.9% last month due to the Iran conflict and shipping disruptions. Raising interest rates may not have much of an impact on this situation.