Investor expectations that rising inflation will force the Federal Reserve to raise interest rates this year are creating a political quandary for Republicans ahead of the midterm elections, as well as new chairman Kevin Warsh.Bond markets show that traders see it as a fifty-fifty proposition that the central bank will raise its interest rate target before the end of the year.Overseeing a rate hike would be a major headache for Warsh, whom President Donald Trump appointed after castigating his predecessor, Jerome Powell, for failing to cut rates.
A rate hike would also be a new problem for Republicans, especially if it came before the November elections. It would increase awareness of high-interest mortgages and car loans, adding to the miseries households are already experiencing, such as high inflation, expensive housing, and, most recently, soaring gas prices.
TRUMP GOING TO LET WARSH ‘DO WHAT HE WANTS TO DO’ AT FED WITH INTEREST RATES
“Things voters don’t like to see going up include interest rates and gas prices, so this is very bad news for Republicans,” Peter Loge, director of the George Washington University School of Media and Public Affairs, told the Washington Examiner.
Up until recently, a rate hike was not seen as likely.
