Fed Chair Warsh faces pressure to raise rates
Federal Reserve Chair Kevin Warsh is heading into his first Federal Open Market Committee meeting with pressure to raise interest rates. The benchmark rate is currently in the 3.5% to 3.75% range.
The market is betting on a rate hike, with options markets assigning an 80% probability to at least one quarter-point increase before year’s end. This is driven by May data showing strong payrolls and rising consumer prices.
The two-year Treasury yield has crossed above 4%, overtaking the Fed’s policy rate, and 30-year bonds have touched levels not seen since 2007. Despite this, President Trump has publicly contested the market’s rate-hike narrative, calling for the central bank to cut rates instead.
The Fed’s decision will be closely watched, with Warsh’s post-meeting statement and press conference parsed for signals on the central bank’s next move.