Warsh likely to side with financial markets over Trump as Fed rate hike expected

Federal Reserve Chair Kevin Warsh faces a difficult decision as he balances the desires of financial markets and President Donald Trump. Markets anticipate a rate hike, while Trump seeks lower or unchanged rates. Economists believe Warsh will side with the markets and raise interest rates during Wednesday's meeting. Warsh has previously warned that inflation remains too high and may require higher borrowing costs.

Inflation is still high, and investors expect higher interest rates on government and corporate bonds. A quarter-point increase would be the first in three years. If the Fed doesn't hike, it risks appearing to yield to White House pressure, which could damage its credibility. Warsh's support for a rate hike may also be bolstered by his father-in-law's friendship with Trump, though it remains uncertain how many more hikes may follow. Wall Street anticipates three hikes, with additional increases in December and March.