Donald Trump spent months saying Jerome Powell was the problem. Now Powell is gone, but rates have not budged. On Friday, traders put an 86.9% chance on the Federal Reserve raising rates next week.

That bet runs against everything Trump promised. He wanted cheap money, and even picked Kevin Warsh to deliver it. Warsh has not cut once.

“As an investor, you have to ask yourself: President Trump effectively made rate CUTS a pre-condition for his next Fed Chair. Will Fed Chair Warsh actually raise interest rates in his first rate move since being appointed Fed Chair by President Trump?” analysts at the Kobeissi Letter posed.

Are markets overestimating the chances of a rate hike? No FOMC chair has cast a dissenting vote since 1939!

Warsh Was Trump’s Favored Hire to Cut Rates

Warsh took the oath on May 22, after Trump spent the spring calling Powell slow and late. But Powell did cut, as his committee lowered rates three times in late 2025, finishing on December 10.

Warsh has lowered them zero times, with his two meetings in June and July ending with no change. If the CME FedWatch Tool is enough to go buy, he may not cut again in the next meeting.

That is Heather Long, chief economist at Navy Federal Credit Union. Trump hammered Powell for being too late to cut. Long thinks Warsh fears the reverse.

A hike could actually help lower-income Americans, she argues, by cooling prices.

In July, three officials voted to raise rates instead, and based on what interest rate bettors see, the odds are in their favor.

Trump still wants a rate near 1%. Wharton’s Jeremy Siegel says Trump pressure and midterms are all that hold the Fed back.

Friday’s Numbers Look Concerning for Warsh

Core prices, which ignore food and fuel, rose 0.3% in August. Economists expected 0.2%. Gasoline jumped 3.9% in a single month.

Fed Governor Christopher Waller had warned a hot reading would put a hike on his table. UBS now expects two increases this year.

The White House sees none of that. Kevin Hassett, who runs the National Economic Council, points to core inflation at 1.6% over a three-month window, a shorter window than the Fed uses.

Still, not everyone arguing against a hike works for Trump. Among them is Daniel Lacalle, chief economist at Tressis, who argues that a rate hike would go against the Fed’s dual mandate.

This argument comes as the labor market improves, albeit not enough. Notably, 162,000 jobs were created in August, unemployment was steady at 4.1%, and participation was rising.

“Do not confuse an energy-price shock with demand overheating. Hiking into a recovering job market would be a massive policy mistake,” Lacalle warned.

His point cuts both ways. If energy drove August inflation, no chair was ever going to hand Trump his 1%.

Warsh could still cut later. But he votes on Wednesday. The question is no longer whether Trump got the chair he wanted (Kevin Warsh). It is whether the chair (Jerome Powell) was ever what stood in his way.

Bitcoin (BTC) and gold both slipped on the CPI reaction, but recovered almost immediately.

Source: BeInCrypto