The Federal Reserve is expected to raise interest rates on Wednesday, putting Kevin M. Warsh, the chairman, at odds with the administration just before the midterms. Kevin M. Warsh and his colleagues on the Federal Reserve policy-making committee appear boxed in to raising rates this month. Sept. 15, 2026, 5:04 a.m. ET Days before President Trump named Kevin M. Warsh as his pick to run the Federal Reserve, he griped about his past experience picking the leader of the central bank.

"They’re saying everything I want to hear," he told attendees at the World Economic Forum’s annual gathering in Davos, Switzerland in late January. "They get the job, and all of a sudden, ‘Let’s raise rates a little bit.’" Four months in, Mr. Warsh is on the cusp of doing exactly that. The Fed is expected to raise interest rates by a quarter of a percentage point on Wednesday, as it tries to stamp out inflation that has overshot the central bank’s 2 percent target for five years. It would be the first increase since July 2023.

Raising rates from the current 3.5 percent to 3.75 percent level would directly defy Mr. Trump less than two months before midterm elections that will determine whether Republicans retain control of Congress. Mr. Trump has long pressured the Fed to lower borrowing costs to boost economic growth and make interest payments on the national debt less costly. He repeatedly demanded this of Jerome H. Powell, whom the president elevated to chair in his first term. Mr. Trump’s Justice Department later opened a criminal investigation into Mr. Powell when he did not comply. This week’s decision has morphed into a litmus test for Mr. Warsh, who had been staunchly critical of the central bank’s handling of inflation before taking the helm. As chairman, he vowed to vanquish it once and for all. Now faced with an economy on solid footing, unemployment low and price pressures barely abating, Mr. Warsh and his colleagues on the policy-making committee appear boxed in to raising rates. Financial markets see an increase this week as all but guaranteed, driven in large part by Mr. Warsh’s own tough talk, which he delivered as recently as last month at the Fed’s annual conference in Jackson, Wyo. Failing to follow through now risks eroding Mr. Warsh’s credibility and exacerbating a sell-off in U.S. government bonds that has already pushed yields on 10-year Treasuries this week to a multiyear high of 5 percent.

"He signed up for the job," said Ellen Meade, who was a senior adviser to the Fed’s board of governors until 2021 and is now at Duke University. "He has to decide what’s important to him — his legacy as Fed chair or getting the approval of the administration." From Rate Cuts to Rate Hikes When Mr. Trump tapped Mr. Warsh for the job in January, the Fed was considered more likely to lower rates than anything else. By May, when Mr. Warsh was officially sworn in, those prospects had evaporated. The culprit was Mr. Trump’s war with Iran, which upended the inflation outlook. Expectations about the Fed’s appetite to raise rates firmed after Mr. Warsh decided to begin his tenure with a steely message on inflation. Markets were left guessing where exactly the new chairman stood in subsequent weeks, however. Part of that was by design, with Mr. Warsh eschewing the typical kind of guidance that previous Fed leaders had given. But it also reflected the mixed signals the chairman inadvertently sent at the July meeting about how the Fed would achieve its goals. That forced him to reset the narrative during his Jackson Hole address. Image President Trump has long pressured the Fed to lower borrowing costs, but it is expected to raise them this month under the leadership of Kevin M. Warsh. Mr. Warsh, in ceding so much ground to markets to fill in the gaps about where the Fed is headed, now faces an intractable situation if he had not planned on raising rates this week. Charles Evans, who served as president of the Federal Reserve Bank of Chicago from 2007 to 202...