A decision to raise rates next week would come at a politically fraught time — less than two months before a midterm election that will determine control of Congress.
Investors now overwhelmingly expect the Federal Reserve to raise interest rates next week after new data Friday showed gas prices drove inflation in August to its fastest monthly pace since May, and consumer prices beyond food and energy rose more than predicted.
If Fed Chair Kevin Warsh and his fellow policymakers follow through, the rate hike would come less than two months before a midterm election that will determine control of Congress — the kind of political optics that the Fed tries to avoid. It would also anger President Donald Trump, who has made clear he chose Warsh in the hope that he would push borrowing costs down, not up.
