Trump escalates pressure on Fed Chair Warsh as markets price the cycle's first rate hike at this week's FOMC
With futures pricing roughly 60-66% odds of a 25bp hike at the Sept 15-16 FOMC, Trump, VP Vance and Treasury Secretary Bessent are publicly pressing the Fed not to raise rates. Trump called FOMC members 'clowns' while saying his own appointee, Chair Kevin Warsh, is trying to 'do the right thing.' Warsh has signaled a hike may be needed with inflation still above target, setting up a collision as the decision lands Sept 16.
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A looming Trump-Warsh clash tests Fed independence just as the first hike of the cycle nears.
Bloomberg reported Warsh on a 'collision course' with Trump as a rate hike looms, with the White House, VP and Treasury openly lobbying against tightening even as the chair signals inflation above target may force the Fed's hand at the Sept 15-16 meeting.
The White House frames lower rates as necessary to sustain growth and reward Trump's economy.
RSM's analysis described the Fed tilting hawkish as Warsh 'promises price stability,' underscoring the tension with a White House demanding cuts to keep growth and markets buoyant into the midterms.