By Anna Szymanski
Sept 16 (Reuters) - An unsettled few days set the scene for the week's main event: the Federal Reserve's policy decision. Markets overwhelmingly expect a quarter-point rate hike, the central bank's first since 2023, against the backdrop of resurgent oil prices and a 10-year Treasury yield that's recently breached the important 5% mark.
A rate increase could put Fed Chair Kevin Warsh on a collision course with the White House, given President Donald Trump's continued preference for easing policy. But given all the economic data supporting calls for a hike, Warsh risks losing credibility if the central bank stays on hold.
Today's decision - and the messaging surrounding it - will be a major test for Warsh. The Fed chair struck a hawkish tone at Jackson Hole last month and, with U.S. inflation still running above target and the unemployment rate still low, policymakers risk undermining their credibility if they don't follow through and lift the benchmark rate to the 3.75%-4.00% range.
That's as Donald Trump continues to push for the U.S. to have the lowest borrowing costs in the world. The U.S. president recently threatened to stop trading with some countries if the Fed does not cut rates, though markets have not taken that threat very seriously.
#rate #markets #president #decision
Sept 16 (Reuters) - An unsettled few days set the scene for the week's main event: the Federal Reserve's policy decision. Markets overwhelmingly expect a quarter-point rate hike, the central bank's first since 2023, against the backdrop of resurgent oil prices and a 10-year Treasury yield that's recently breached the important 5% mark.
A rate increase could put Fed Chair Kevin Warsh on a collision course with the White House, given President Donald Trump's continued preference for easing policy. But given all the economic data supporting calls for a hike, Warsh risks losing credibility if the central bank stays on hold.
Today's decision - and the messaging surrounding it - will be a major test for Warsh. The Fed chair struck a hawkish tone at Jackson Hole last month and, with U.S. inflation still running above target and the unemployment rate still low, policymakers risk undermining their credibility if they don't follow through and lift the benchmark rate to the 3.75%-4.00% range.
That's as Donald Trump continues to push for the U.S. to have the lowest borrowing costs in the world. The U.S. president recently threatened to stop trading with some countries if the Fed does not cut rates, though markets have not taken that threat very seriously.
#rate #markets #president #decision
2 months ago
