Option 1
Cut Rates
Driver: Trump demand / market pressure
Upside: Cheaper borrowing, market boost
Risk: Reignites inflation above 4.1% — energy already surging
▲ INFLATION RISK
Option 2
Hold Rates
Driver: Current Warsh posture
Upside: Maintains credibility, waits for clarity
Risk: Trump attacks Fed independence; recession risk if demand slows
▲ POLITICAL RISK
Option 3
Raise Rates
Driver: Strict inflation-fighter logic
Upside: Signals serious inflation commitment
Risk: Crashes markets, triggers recession, destroys consumer spending
▲ RECESSION RISK