What to Watch at the Federal Reserve’s July Meeting

The Federal Reserve is at an inflection point in its yearslong campaign against elevated inflation. On Wednesday, officials will decide whether to raise interest rates to tame price pressures or keep them unchanged as they wait and see what happens with the economy. Rates are currently set in a range of 3.5 to 3.75 percent.

Kevin M. Warsh, who will be presiding over his second meeting since taking over as chairman, has long vied for policymakers to engage in a “good family fight” before determining the most appropriate policy settings. That, coupled with Mr. Warsh’s opposition to providing any signal about the trajectory for rates, has injected considerable uncertainty into the outcome of July’s gathering.

On Wednesday, the Fed will release its rate decision at 2 p.m. in Washington. Mr. Warsh will hold a news conference at 2:30 p.m.

Here is what to watch:

Raise or Hold?

Many expect the Fed on Wednesday to hold rates steady. But a sizable contingent believes that Mr. Warsh’s best bet is to usher in a quarter-point increase.

The case for a rate increase centers on the notion that inflation, while cooler in June than in previous months, is unlikely to get back to the central bank’s 2 percent target in a timely fashion on its own. The Fed has missed that goal for roughly half a decade.

Mr. Warsh has made price stability his top priority since taking over as chairman. Delivering a rate increase on Wednesday would help to fortify that pledge and put to rest criticism that he is not independently minded when it comes to setting policy. President Trump, who handpicked Mr. Warsh for the job, has long demanded lower borrowing costs. Asked on Monday about the chance that the Fed could raise rates, Mr. Trump reiterated that “rates should be lowered.”