Trump wants lower rates. His new Fed chairman is poised to raise them

The Federal Reserve finds itself in a confusing economic moment, but one thing has become clear: Interest rates are moving higher, likely starting Wednesday. That’s an awkward reality for Kevin Warsh, the Fed chairman handpicked by President Donald Trump to lower rates.

If the Fed hikes its key interest rate as Wall Street expects, it would effectively put him at odds with the president, who has continued to demand lower borrowing costs, even as inflation remains stubbornly above the Fed’s 2% target. Fed officials are expected to begin what could be a series of rate hikes designed to slow the US economy and put inflation back on track. The ongoing war in the Middle East has pushed up energy prices and now threatens to make inflation more persistent. If expectations bear out, the Fed’s decision would mark the first rate increase since July 2023.