Warsh's Independence Tested by Rising Inflation Expectations

Kevin Warsh, the newly sworn-in Federal Reserve chairman, is facing pressure from President Donald Trump as the Fed prepares to decide on a potential interest rate hike. At a White House ceremony in May, Trump praised Warsh and encouraged him to be 'totally independent', saying 'Just do your own thing.' However, this week's inflation report has put Warsh's independence to the test.

The consumer price index showed core inflation grew at a hotter-than-expected pace in August, pushing investors' expectations for a rate increase above 85% in futures markets. This has raised concerns that Warsh may be on a collision course with Trump, who had initially encouraged him to be independent.