Fed should defy Donald Trump with rate rise, top economists say
The US Federal Reserve is expected to raise interest rates to combat inflation, despite opposition from President Donald Trump. The Fed has already raised rates for the first time in three years, citing elevated inflation. Economists argue that further hikes are necessary, while Trump has demanded rate cuts to 1% or less. The bond market shows extreme short counts betting on a hike, with the 10-year Treasury yield reaching its highest level since 2007.
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- ✓ The Fed raised interest rates for the first time in three years, citing elevated inflation.
- ✓ The 10-year Treasury yield has reached its highest level since 2007.
- ✓ There is a 96% chance that the Fed will raise interest rates at least once by January 27, 2027.
- ✓ President Donald Trump has demanded the Fed cut interest rates to 1% or less.
What changed
Fed Chairman Kevin Warsh's comments that interest rates may need to be raised further have added to the speculation about the Fed's next move.
Live updates
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Fed faces pressure to raise interest rates despite Trump opposition
The US Federal Reserve is expected to raise interest rates to combat inflation, despite opposition from President Donald Trump. The Fed has already raised rates for the first time in three years, citing elevated inflation. Economists argue that further hikes are necessary, while Trump has demanded rate cuts to 1% or less. The bond market shows extreme short counts betting on a hike, with the 10-year Treasury yield reaching its highest level since 2007.
Why it matters
The Federal Reserve's decision to raise interest rates is crucial in the current economic climate, as it aims to control inflation while maintaining economic growth. The opposition from President Trump adds a layer of complexity to the situation, as it raises questions about the potential impact on the economy and the Fed's independence. The bond market's reaction and consumer confidence are also important indicators to watch.
What is confirmed
- The Fed raised interest rates for the first time in three years, citing elevated inflation.
- The 10-year Treasury yield has reached its highest level since 2007.
- There is a 96% chance that the Fed will raise interest rates at least once by January 27, 2027.
- President Donald Trump has demanded the Fed cut interest rates to 1% or less.
Still unconfirmed
- The Fed may raise interest rates by 50bp to make a strong statement.
What to watch next
- The Fed's interest rate decision on October 28
- The release of US consumer confidence data
- The Fed's balance sheet adjustments
confidence 85%Sources used for this update (16)
- www.businessinsider.com — What smart people in business and economics are saying about the Fed interest rate hike
- spectrumlocalnews.com — Federal Reserve raises interest rate a quarter percentage point, first hike in 3 years
- www.irishtimes.com — The war between Donald Trump and the Fed
- www.cnbc.com — Warsh's Fed regime change is moving ahead, and meeting resistance
- www.breitbart.com — Breitbart Business Digest: The End of Fear-Mongering Over Greenland and the Bond Market
- kimkj.com — [AI Library] Trump, the Diplomacy of Insult – Chapter 35: Trump's War with the Fed
- govtschemes.org — Trump Interest Rates: Why He Wants 1% After Fed's Hike
- finance.yahoo.com — Analysis-There's a reason Trump is the only one talking about ...
- spectrumlocalnews.com — Fed's Warsh says interest rates may need to be raised
- www.fool.com — The Odds of an Oct. 28 Fed Rate Hike Are Soaring, and ...
- www.abc.net.au — Markets live: ASX to edge higher ahead of expected RBA interest rate hike as US bonds surge
- www.fool.com — The Odds of the Fed Ramping Up Its Rate-Hiking Cycle Are ...
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Economists Urge Fed Rate Hike to Defy Donald Trump
Top economists argue the Federal Reserve should raise interest rates to resist pressure from Donald Trump. This comes as the 10-year Treasury yield reaches its highest level since 2007 and the bond market shows extreme short counts betting on a hike. While some suggest a 50bp increase would be a strong statement, others warn that the biggest risk to the sinking bond market is the Fed choosing to stand pat. The central bank is expected to hike rates to combat rising prices.
Why it matters
The Federal Reserve's independence is under scrutiny as it balances inflation control against political influence. Bond market volatility currently reflects high expectations for monetary tightening. The 10-year Treasury yield serves as a benchmark for global borrowing costs.
What is confirmed
- The 10-year Treasury yield has hit its highest level since 2007.
- The Federal Reserve is expected to raise interest rates due to rising prices.
Still unconfirmed
- Scott Bessent stated that the bond market has taken down more governments than howitzers.
What to watch next
- The official Federal Reserve rate decision announcement
- Market reaction to the size of the rate hike
- Statements from Fed officials regarding political independence
confidence 80%Sources used for this update (9)
- Fortune — 'The bond market has taken down more governments than howitzers': Scott Bessent cuts Kevin Warsh some slack ahead of anticipated rate meeting
- Bloomberg.com — Bond Market’s ‘Extreme’ Short Counts on Fed to Deliver Rate Hike
- CNN — 10-year Treasury yield hits highest level since 2007 ahead of Fed rate decision
- ING Think — Rates Spark: How about a 50bp hike? Now that would be quite the statement
- Reuters — Biggest risk for sinking bond market is Fed standing pat
- Financial Times — Fed should defy Donald Trump with rate rise, top economists say
- www.usatoday.com — Interest rate decision live: Fed expected to hike rates as prices rise
- markets.ft.com — FTSE EPRA Nareit Global REITs USD Total Return Index
- markets.ft.com — S&P Kensho Global Quantum Computing Technologies Index (USD) TR
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