The Federal Reserve is expected to raise interest rates on September 16, putting Chair Kevin Warsh on a potential collision course with Donald Trump as higher energy costs threaten to keep inflation elevated.
A quarter-percentage-point increase would lift the benchmark rate to 3.75%–4.00%, marking the first hike since July 2023, according to Reuters.
The decision is scheduled for 2 p.m. Eastern Time, followed by Warsh’s press conference at 2:30 p.m., according to the Fed’s calendar.
Inflation Is Keeping the Pressure On
August consumer inflation stood at 3.4%, while oil prices above $100 a barrel have added another challenge. Disruption linked to the Iran war risks pushing energy costs through the wider economy, ING researchers explained.
Support for action is strong: 50 of 51 economists surveyed by the University of Chicago’s Booth School backed a hike, with 14% favouring a larger half-point increase, the Financial Times reported.
Related: CPI Report: August Inflation Stays High, Putting Fed Rate Hike in Focus
One Hike or the Start of More?
Trump continues to demand lower borrowing costs, while Warsh has signalled that persistent inflation could require tighter policy.
Traders are betting on at least four quarter-point increases over the next year, according to Semafor. Those bets are expectations, not Fed commitments. ING’s September 11 forecast instead argued that one increase could be enough if inflation subsequently cools.
Related: Fed Chair Kevin Warsh Signals Inflation Fight Isn’t Over
The bigger question is what follows today’s decision. Warsh’s outlook will help show whether borrowers face a single increase or a longer period of rising costs, and how firmly the Fed will resist White House pressure.
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