Fed poised to clash with Trump - Semafor

As the Federal Reserve weighs whether to raise interest rates this week, Chair Kevin Warsh must choose between breaking markets’ trust and triggering President Donald Trump’s ire.

Vice President JD Vance and Treasury Secretary Scott Bessent recently joined the president in arguing for lower interest rates. But investors overwhelmingly expect Warsh to deliver on his hawkish speech in Jackson Hole last month.

Disappointing them would hurt his credibility, particularly after the government said that prices beyond food and energy rose more in August than expected.

The damage could be severe enough to boost borrowing costs even in the absence of a hike.

“Warsh’s Jackson Hole speech led the market to expect a hike if the inflation news was imperfect, and while the [consumer price index] was not concerning, it was imperfect,” Goldman Sachs analysts wrote. Officials “might worry about the consequences of not hiking for market perceptions.”