Trump Reignites Fed Battle as Wall Street Bets on Rate Hike, Not Cuts

President Donald Trump is once again challenging the Federal Reserve independence, publicly stating his intent to restart efforts to remove Fed Governor Lisa Cook from her post. This comes just days after the Supreme Court blocked his first attempt, ruling the administration failed to follow proper procedures. Despite Trump's pressure for lower borrowing costs, financial markets are firmly expecting the central bank to actually raise interest rates this year, reflecting a big difference in opinion about the economy's direction. Trump went on CNBC to call the new board under Chairman Kevin Warsh 'a little bit hostile' and hinted they might 'do the wrong thing' by not cutting rates. This clash highlights a long-standing tension, especially since Warsh, who replaced Jerome Powell in May 2026, has already signaled a strong focus on controlling inflation, even if it means higher rates. With inflation still above the Fed's target and key economic data like employment showing resilience, many analysts believe the Fed has no choice but to tighten its monetary policy further. Wall Street bets reflect this reality, with a significant chance of a rate hike priced in by year-end, possibly even multiple increases. The outcome of Trump's renewed legal fight against Governor Cook will be closely watched, as it could change the balance of power on the Fed's policymaking board. But for now, the markets are listening to the economic data and Warsh's firm stance, preparing for a period of potentially higher interest rates, which could affect everything from loan costs to stock market performance.