Warsh Faces Inflation Test Amid Trump Pressure

Federal Reserve Chairman Kevin Warsh faces mounting pressure to raise interest rates at the Sept. 15-16 meeting after August core consumer prices rose 0.3% from the previous month, exceeding economists’ expectations. Financial markets now assign more than an 85% probability to a rate increase, with some investors anticipating another hike by December, as inflation remains above the Fed’s 2% target and energy prices have surged. The decision will test Warsh’s credibility after he warned that policymakers would need to act if inflation failed to move clearly and quickly toward the target. Warsh must also navigate pressure from President Donald Trump, who has repeatedly called for lower borrowing costs even as the administration faces voter concern about the cost of living. Analysts say the Fed risks either undermining its independence and credibility by yielding to political pressure or allowing inflation to become more entrenched by holding rates too low.