Kevin Warsh has—so far—managed to walk the line between his popularity in the White House and reassuring markets of Fed independence.
That balance is getting more precarious, as data is shaping up towards expectations for another base interest rate hike at the conclusion of the next Federal Open Market Committee (FOMC) meeting in October.
Expectations for another 25bps hike now sit at a little over 75%, CME’s FedWatch barometer shows at the time of writing. That move would irk President Trump, who has been lobbying for lower rates since before he returned to office.
However, with market expectations shifting higher—as well as bond yields increasing—Warsh and the FOMC will face renewed credibility questions if they don’t act.
