Fed heads for its first hike under Warsh as Trump demands the world’s lowest rates

The Federal Reserve’s policy meeting runs Tuesday and Wednesday, with the rate decision due at 2:00 pm and Chair Kevin Warsh’s press conference at 2:30 pm⁷. Reuters reported that the table is set for a rate increase, which would be the first delivered under Warsh¹. The decision falls on Sept. 16³. Traders were pricing about an 86.5 percent chance of a hike at the meeting, up from about 67 percent earlier⁸.

At the July meeting the Federal Open Market Committee voted 9 to 3 to keep rates unchanged at 3.50 to 3.75 percent². The three dissenters – Cleveland’s Beth Hammack, Dallas’s Lorie Logan and Minneapolis’s Neel Kashkari – preferred to raise the range by one-quarter percentage point³. Reuters noted that the same three regional bank presidents had already felt the case for a move in July¹.

Why it matters to investors

Ahead of the meeting President Trump said the United States should have the world’s lowest interest rate⁴. Semafor reported that the call piles pressure on Warsh days before the bank is expected to raise rates amid an increasingly hawkish global outlook¹⁰. National Economic Council director Kevin Hassett said Trump would defend Warsh’s independence above all⁴.

Bloomberg and the Financial Times both described Warsh and Trump as on a collision course as the hike looms^5,6. The FT attributed the clash to stubbornly high inflation as markets prepared for the decision⁶. Bloomberg noted that Trump had praised his hand-picked chairman at the White House swearing-in ceremony in May⁵. Analysts say the central bank chief’s credibility is on the line¹¹.

What to watch

Semafor reported that investors overwhelmingly expect Warsh to deliver on the hawkish speech he gave at Jackson Hole last month⁹. UBS expects the Federal Reserve to raise interest rates twice before the end of 2026, citing comments from Warsh and jobs data¹². Retail sales land in the same week as the decision⁷.

Gold slipped as the oil rally fanned rate-hike bets ahead of the meeting⁸. Forex Factory framed the week as all eyes on the Fed to tackle high inflation in the world’s largest economy¹¹. Whether the committee splits again, and in which direction, is the detail to read after the statement^2,3. A hike would reverse the July decision rather than extend it, and would do so with the same three regional presidents already on record wanting a higher range^1,2.