Today's decision - and the messaging surrounding it - will be a major test for Warsh. The Fed Chair struck a hawkish tone at Jackson Hole last month and, with U.S. inflation still running above target and the unemployment rate still low, policymakers risk undermining their credibility if they don't follow through and lift the benchmark rate to the 3.75%-4.00% range.

That's as Donald Trump continues to push for the U.S. to have the lowest borrowing costs in the world. The U.S. president recently threatened to stop trading with some countries if the Fed does not cut rates, though markets have not taken that threat very seriously.

The bigger question for traders is whether a prospective hike today would be a one-off or the start of a new tightening cycle. Warsh's remarks will be closely watched for any steer on the path forward when he speaks at 2:30 p.m. (1830 GMT) today.

The Fed chair is famously averse to forward guidance, which means his every word and gesture is likely to be scrutinized by Fed watchers for clues about what could be coming down the pike.

Expectations for monetary tightening are one of many forces that have recently helped spur the 10-year Treasury yield above the 5% level. It slipped back from that level on Tuesday after hitting a 19-year high of 5.041% but has tested that several times since.

Meanwhile, at a congressional hearing on Tuesday, U.S. Treasury Secretary Scott Bessent acknowledged that higher yields reflect the U.S. fiscal deficit and other factors, but defended his recent bond buybacks, which he claimed had helped contain the jump in borrowing costs. He also attributed rising yields to "global issues".

On the latter, he has a point. Resurgent energy prices are stoking fresh inflation fears and aggravating bond yields globally.

The latest Middle East escalations are keeping oil prices above $100 a barrel, with both Brent and WTI crude settling at their highest levels since May 19 on Tuesday after Saudi Arabia suspended loading operations at its Yanbu port.

Oil prices nudged lower early on Wednesday, partly on news of rising U.S. crude inventories, which helped to steady bond and equity markets that had sold off on Tuesday. But Brent crude is still up around 19% since the start of the month due to increased supply disruption in the Middle East.

Finally, for more on the other major story of the week - AI safety concerns - we have to go back to Bessent's congressional hearing. He defended the Trump administration's AI strategy when challenged on recent concerns about the pace of technological development, emphasizing a balance between safety and competitiveness against China.

With that, onto Mike Dolan's latest column.