Fed Defies Trump

Wednesday, the Federal Reserve is expected to raise its benchmark rate for the first time in three years, defying President Donald Trump's push for a cut.

Futures traders put the odds of a hike above 90 percent, the Associated Press reported, after Friday's inflation report found prices still running hot in August. The Fed's benchmark sits near 3.6 percent. A quarter-point increase would be its first since 2023, NBC News reported.

Kevin Warsh, the Fed chair, signaled the move two weeks ago at the central bank's Jackson Hole conference, telling the crowd inflation had not yet been beaten, the Associated Press reported. Oil and gas prices have jumped too. The Iran war grinds on. Crude oil touched $106 a barrel this week, NBC News reported.

Surging investment in AI data centers has also stoked inflation and pushed up longer-term borrowing costs, though some leading tech companies are now weighing whether to slow that buildout, the Associated Press reported. "I don't see any end to the war in Iran right now," said Kristin Forbes, an economist at MIT's Sloan School, per the Associated Press. "Given what everyone has been through in the last few years of high inflation, consumers are more sensitive, companies are more sensitive, they raise prices faster."

For months, Trump has pushed for lower rates. "The United States is so strong we should be paying the lowest interest rate in the world," he said Sunday, according to the Associated Press. Trump wants rates near 1 percent or half a percent, NBC News reported, and he posted online that "a strong country means a lower interest rate."

Kevin Hassett, Trump's top economic adviser, said on CNN that Trump "100% respects the independence" of Warsh, ABC News reported, but told Fox News he would be wary of a hike so close to the midterm elections, seven weeks away, where affordability has become a central issue, the Associated Press reported.

NBC News reported that Warsh hasn't insulted the president the way Trump once turned on his predecessor, Jerome Powell. Not this time. Trump instead called him "fantastic" while accusing the Fed's board of being political.

The Fed's meeting concludes Wednesday, September 17, 2026, when Warsh will announce the decision.

"The Chair's repeated stern warnings on inflation intolerance risk institutional credibility absent some action to back it up," JPMorgan Chase economist Michael Feroli wrote in a preview of the meeting, ABC News reported.