Warsh's Rate Hike Bind: Fed Expected to Raise Rates Despite Trump's Demands

The Federal Reserve is expected to raise interest rates for the first time in over three years, despite President Donald Trump's calls for lower borrowing costs. The rate hike, which could happen as early as this week, would put Chairman Kevin Warsh at odds with the president.

Warsh was handpicked by Trump to lower rates and combat inflation, but the Fed is now facing a confusing economic moment. Inflation remains above the 2% target, and energy prices have risen due to the ongoing war in the Middle East.

The bond market has already started doing some of the Fed's work for it, making borrowing more expensive even before any rate hike. The yield on the 10-year US Treasury rose above 5% on Tuesday, its highest closing level since 2007.