Less than 60 minutes before the Fed announces its decision statement, Trump advisor: Believes Warsh will do the right thing

The Federal Reserve's interest rate meeting is imminent. Overnight interest rate swaps indicate approximately a 38% probability of a 25-basis-point rate hike by the Fed this time, with the remaining probability betting on holding rates steady. Since 2008, the Fed has never implemented a rate hike when the market-implied probability of a hike was below 60%.

White House advisor Hassett stated that he expects Fed Chair Warsh to do the right thing. "We believe in Warsh's judgment, and our confidence in Warsh is extremely high." He saw no reason to believe that U.S. debt would be downgraded, noting that the long-term budget is developing in the right direction, and they expect inflation to face downward pressure.

The uncertainty surrounding this Fed interest rate meeting stems largely from Warsh's commitment to abandon the Fed's long-standing practice of providing forward guidance on policy signals. Although he has repeatedly emphasized restoring price stability, he has not revealed many clues about how specifically to achieve this goal.

Among more than 100 economists surveyed by Bloomberg, only two expected the Fed to raise rates at the July meeting, while the rest expected the target range for the federal funds rate to remain unchanged at 3.5% to 3.75%.

Bank of America also expects the Fed to hold steady at this meeting, but predicts that two regional Fed presidents—Lorie Logan and Beth Hammack—will cast dissenting votes in favor of a rate hike.

However, a small number of investment firms, including Citadel Securities, believe that the market has underestimated the likelihood of the Fed taking immediate action.

They argue that if Warsh chooses to unexpectedly raise rates, it would not only reinforce his determination to curb inflation but also demonstrate to the market that the Fed will no longer rely on forward guidance to "tip off" investors in advance.