Warsh's Rate Hike Signal Puts Trump's Inflation Record Under Scrutiny
US Federal Reserve Chairman Kevin Warsh is facing a challenge in maintaining his credibility after opening the door to higher interest rates at the recent Jackson Hole conference. With inflation stuck above the central bank's 2% target, Warsh has signaled that higher rates may be needed to curb it.
This move could be seen as inconsistent with President Donald Trump's wishes for low interest rates, given his repeated calls for the lowest rates in the world and criticism of the Fed for being 'hostile' and 'political'.
The Federal Reserve meets on September 15-16 to decide whether to approve a quarter-percentage-point hike in the overnight policy rate. Investors now see a roughly two-to-one chance the central bank will raise rates, up from odds of a hike later this month.