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Federal Reserve Chair Kevin Warsh faces his first major test next week as markets bet on a rate hike on September 16, even as President Donald Trump pressures the central bank to cut borrowing costs. The dilemma has become sharper after back-to-back inflation readings pointed to renewed price pressures. The Consumer Price Index increased 0.4% last month after edging up 0.1% in July, the Labor Department's Bureau of Labor Statistics said. In the 12 months through August, consumer inflation advanced 3.4%. The data have pushed markets further towards a rate hike. Soon after the CPI data was published on Friday, financial markets priced in a roughly 91% chance of a rate hike next week, up from about 72% on Thursday, according to CME's FedWatch tool, as reported by Reuters. For Warsh, the decision he takes is not only about market expectations but also about his own credibility and the Fed’s independence. At Jackson Hole last month, Warsh clearly articulated that policymakers should be confident that underlying inflation was moving towards the central bank’s 2% target; otherwise, they had “work to do.” Friday’s inflation data makes that promise harder to ignore. “For the Fed, it is time to put up, or shut up,” wrote Inflation Insights founder Omair Sharif. "You cannot give a speech like you did at Jackson Hole and not support a rate hike at the next meeting. You will either have to back up those words or end up as the boy who cried wolf." On the other hand, the pressure from the White House has been equally direct. Trump has repeatedly demanded lower interest rates, arguing that borrowing costs should fall. Last week, he even posted on social media: “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.” That puts Warsh in an uncomfortable position. Cutting rates amid sticky inflation data will undermine the Fed’s credibility; at the same time, hiking rates could intensify Trump’s criticism against the central bank. For Warsh, the clearest option may be to prioritise the inflation mandate, deliver a measured 25-basis-point hike and signal that future moves will depend on incoming data, experts said. That would risk another confrontation with Trump. But doing nothing after warning that the Fed may need to act could carry a different risk, that is, weakening the central bank’s credibility. It is a major test for Warsh, given that its concerns extend not only to where interest rates go next but also to showing that the Fed's monetary policy is guided by data, not politics. Sanchari Ghosh is an Assistant Editor at Mint with over 12 years of experience in journalism, specialising in personal finance, DLT & DeFi, geopolitics and foreign policy, with a particular emphasis on how these areas intersect. <br> She writes extensively about how money works in everyday life—helping readers navigate personal finance decisions. <br> As AI reshapes investing behaviour, capital is increasingly flowing into decentralized ecosystems, redefining how assets are managed, traded, and valued. She focuses on explaining how money flows within frameworks like Distributed Ledger Technology (DLT), DeFi protocols, and crypto markets—while also exploring what the future of money could look like in a trustless, programmable financial world. <br> She also focuses on immigration-related issues, simplifying complex topics around visas, passports, overseas financial planning, and the many practical challenges Indians face while moving or living abroad. <br> Alongside personal finance, Sanchari has a strong understanding of international politics, contemporary and historical conflicts, and global state decisions. She closely tracks how geopolitical developments influence economies, markets, and individual financial choices, bringing together finance and global affairs in her reporting. <br> She began her career as a desk editor, which gave her a strong foundation in news writing. Over time, her interest naturally shifted toward personal finance. Before joining Mint in 2020, she worked DNA, The Times of India, Outlook Money, BloombergQuint, and ETMoney. At Mint, she got an opportunity to expand her coverage to include immigration and geopolitical developments while continuing to closely follow personal finance trends and market movements.As a journalist, she is committed to accuracy, intellectual rigour, and fairness. <br> She is an English Major and her work took her across cities including Delhi, Mumbai, and Pune. Living independently from an early age gave her firsthand experience in managing life and money on her own. This practical exposure sparked her strong interest in personal finance. <br> Outside the newsroom, Sanchari is a sports enthusiast who regularly plays lawn tennis and squash. In her younger years, she was also a national-level badminton player. Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates. Oops! 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