Investors shrug off Trump trade threat over interest rates
Investors think the Federal Reserve will hike interest rates, with just a week until the next monetary policy meeting, even though President Donald Trump threatened to cut off trade to certain countries if the central bank does not lower rates.
TL;DR
- Investors believe the Federal Reserve will raise interest rates, with implied odds over 60% for the upcoming meeting.
- President Trump threatened to cut off trade with countries with deficits if the Fed does not lower interest rates.
- Fed Chairman Kevin Warsh has maintained a hawkish tone regarding inflation, which remains above the 2% target.
- Warsh has reaffirmed the Fed's commitment to a 2% long-run inflation target.
- Stronger-than-expected job numbers also increase the likelihood of a rate hike.