Warsh's Rate Hike Dilemma: Will Fed Chair Prioritize Economy or Trump?

Traders are betting on a nearly certain Federal Reserve rate hike next week, despite Donald Trump's promise for cheap money. The CME FedWatch Tool shows an 86.9% chance of a hike, and even analysts who worked with Trump see it as the right call.

Fed Chair Kevin Warsh has not cut rates once since taking over, whereas his predecessor Jerome Powell lowered them three times in late 2025. This has led some to question whether Warsh will prioritize Trump's wishes or do what is best for the economy.

Economists are divided on the cause of inflation: some blame energy prices, while others point to demand. However, even those who argue against a hike acknowledge that it could help lower-income Americans by cooling prices.