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[Fed Rate Hike Conflict Imminent, Warsh May Face First Tightening During His Tenure] 1. The Federal Reserve will announce its policy decision on Wednesday at 2 PM ET (2:00 AM Thursday Beijing time). Financial markets widely expect policymakers to raise the benchmark interest rate by 25 basis points to a range of 3.75%-4.00%, signaling further tightening in the future. High inflation, oil prices at $100 per barrel, and Warsh's repeated emphasis on maintaining price stability and valuing market pricing signals seem to make this move virtually a foregone conclusion. 2. This decision may put Warsh, who took office in May, in a dilemma. Trump appointed Warsh with the explicit desire for rate cuts, but so far has not criticized him for failing to do so, instead blaming other "politically motivated" central bank officials. It remains unclear how Trump will react if the Fed raises rates with the November midterm elections approaching, as his Republican Party strives to maintain its slim majority in Congress. 3. A report from the U.S. Bureau of Labor Statistics showed that the core consumer price index, excluding food and energy, rose 0.3% month-over-month last month. This key indicator of underlying inflationary pressures is well above the level required to achieve the 2% target. Meanwhile, renewed escalation of conflict in the Middle East pushed oil prices above $100 a barrel. The latest data does not help prove that underlying inflation is "clearly and rapidly" approaching the 2% target—precisely what Warsh demanded at last month's global central bank conference. 4. If the Federal Reserve decides to raise interest rates, especially if the officials' forecasts released at the same time suggest another rate hike this year, Warsh may have to reveal at least some information about the interest rate path and the economic outlook, unless he is willing to leave the door open for further rate hikes. TD Securities economists point out that if Warsh still wants to avoid providing forward guidance, his remarks will have to be carefully worded, as the market will certainly be asking whether there will be further rate hikes. 5. JPMorgan economist Michael Feroli stated that if the chairman repeatedly issues harsh warnings of zero tolerance for inflation without concrete action, it will damage the Federal Reserve's institutional credibility. He expects the Federal Reserve to raise interest rates on Wednesday, but believes the decision is "not as certain as the roughly 85% probability reflected in the interest rate futures market." 6. Scotiabank economist Derek Holt believes that raising rates now is not the right move, but given Warsh's previous statements, a rate hike will eventually happen, saying that Warsh "may have been cornered by his own highly market-respecting stance."