Warsh on the job

Global uncertainty and interest rates may remain elevated

The Federal Open Market Committee (FOMC) of the United States (US) Federal Reserve on Wednesday increased the target range for the federal-fund rate by a quarter of a percentage point to 3.75-4 per cent. Given that financial markets had priced in about a 90 per cent chance of a rate increase, the decision hardly surprised anyone. Although the FOMC’s decision was unanimous, it can be seen as another step in establishing Fed Chairman Kevin Warsh’s independence in leading the most important central bank in the world. Many had raised doubts a few months ago over his appointment, questioning whether he would follow President Donald Trump’s line on interest rates. Mr Trump has long argued for lower interest rates. Although he did not really criticise the decision this time, his comments are unlikely to make life any easier for Mr Warsh. Mr Trump said he told Mr Warsh that he might vote with the board because it would not matter, and that the board was very hostile.