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[Fed Rate Hike Expectations Rise, Conflicting with Trump's Stance] ⑴ Markets widely expect the Federal Reserve to raise short-term interest rates by 25 basis points on Wednesday, the first rate hike in three years, aimed at combating persistently high inflation. This move will create a conflict between the central bank and President Trump's stance, which favors rate cuts. ⑵ The current Fed rate is around 3.6%. While a rate hike is not a certainty, as Chairman Kevin Warsh has not signaled the next steps as his predecessors have, most analysts and economists expect one. Warsh previously stated at the Jackson Hole Economic Symposium that the Fed has not yet achieved its goal of curbing inflation. ⑶ A rate hike will add further uncertainty to an already volatile economy and financial markets. In March, the Fed predicted one rate cut this year, but with the renewed escalation of the Iran-Iraq war pushing up oil and gas prices, inflation may remain above the 2% target for a longer period. ⑷ Economists at MIT point out that there are currently no signs of the Iran-Iraq war ending. Given the experience of high inflation in recent years, consumers and businesses are more sensitive, prices are rising faster, and the risk is more skewed towards a more persistent inflation rather than a rapid decline. (5) The surge in AI data center investment is also accelerating inflation and pushing up long-term interest rates, although leading companies are discussing slowing down the technology's development. (6) With the potential Fed rate hike just seven weeks before the midterm elections, high prices and affordability have become key issues. Trump has demanded that the Fed cut rates, but this option is not under consideration. He stated on Sunday that the US is so strong that it should pay the lowest interest rates in the world. (7) Trump has repeatedly attacked Warsh's predecessors with sharp personal remarks, breaking with decades of tradition of presidents treating the Fed as independent. (8) Trump's chief economic advisor stated that Trump fully respects Warsh's independence, but also implied that the Fed should not raise rates so close to the midterm elections, saying that if you want an independent Fed, you shouldn't hinder the elections. (9) Financial markets expect Warsh and the Fed to ignore such warnings. Futures prices indicate that traders believe there is about a 90% probability of a rate hike on Wednesday, a percentage that jumped after Friday's inflation report showed prices remaining stubbornly high and core inflation in August rising from the previous month.