What’s going on: There’s a 90% chance the federal interest rate goes up today... and a 100% chance that President Donald Trump might not like it, according to analysts. Fed Chair Kevin Warsh has been keeping it quiet for the most part, but he’s expected to raise interest rates at 2 pm ET for the first time since July 2023. Most traders are betting on a quarter-percentage-point increase to help bring inflation down to the Fed’s 2% target. Considering that Trump has a history of bullying the Fed chair for not lowering rates, all eyes are on the president. Raising the rates risks unleashing Trump’s wrath, but not following through also risks Warsh’s credibility and independence. One administration official said that while Trump would “100% support” whatever the Fed decides, the president wouldn’t be “super happy” about a rate increase.
Oh, the irony: It’s more than that. The White House has been demanding lower rates because with 48 days to go before the midterm elections, a cost-of-living crisis might make or break Trump’s party. A new report shows the Iran war has been driving up costs like gas prices, and the new tariffs and the AI tech race aren’t helping either. A rate hike could mean borrowing costs get more expensive for new car loans and some mortgages, and credit card interest rates (with average rates already over 22%) are on track to reach record highs. That spells trouble for many families. One June survey found that 56% of Americans are already using credit cards to get basic necessities like groceries, gas, and utilities.
