Market expectations for rate hike haunt Warsh and GOP

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.

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