Bessent and Warsh Take On the Bond Bears

Andrew here. It’s decision day for the Fed. Will the central bank raise interest rates on Wednesday afternoon? Kevin Warsh, the Fed chairman, has signaled that the central bank would need to take action if inflation is over 2 percent. But raising interest rates is not going to fully open the Strait of Hormuz, a bottleneck that is compounding the inflation problem.

And then there is the issue of credibility. What does it mean for the Fed to be independent of the White House? If it doesn’t raise rates, will it be accused of being political? More below.

Credibility test?

Calm has returned to the bond market on Wednesday. But investors who are pushing the Fed to cool inflation and Washington to rein in spending have not been quiet.

Article source: https://www.nytimes.com/2026/09/16/business/dealbook/bessent-warsh-bond-investors.html