WASHINGTON — Federal Reserve Chair Kevin Warsh is facing mounting pressure to raise interest rates after new government data showed inflation accelerated in August, putting the central bank on a politically dangerous collision course with President Donald Trump. Investors now assign more than an 85% probability to a rate increase at the Fed’s Sept. 15-16 meeting, according to CME’s FedWatch tool. It would be the first increase in more than three years, reversing the broad direction of policy since the central bank ended its campaign against post-pandemic inflation. The Labor Department reported Friday that consumer prices rose 3.4% over the 12 months ending in August. Core inflation, which excludes volatile food and energy costs and is closely watched by Fed officials, climbed 2.4%. Gasoline prices helped drive the monthly increase, while underlying consumer prices also came in hotter than economists expected. The timing raises the political stakes. A rate hike would arrive less than two months before midterm elections that will determine control of Congress, even as Republicans struggle to defend the economy amid an unpopular war that has pushed oil prices above $100 a barrel. Trump has made no secret of his preference for lower interest rates. He selected Warsh expecting the Fed chief to reduce borrowing costs, not increase them. Senior White House official Kevin Hassett said Friday that the overall inflation trend remained positive and declined to predict the central bank’s decision. “We have very high regard for Chairman Warsh and respect the independence of the Fed,” Hassett said in an interview on Bloomberg TV. He added that Trump believes there is “plenty of room” for rates to fall and would likely express his view while respecting the Fed’s independence. Warsh’s own recent statements have made inaction harder to explain. In a speech at Jackson Hole, Wyoming, last month, he said the Fed’s leading concern should be controlling prices. Investors and economists now expect him to back up that message with a policy decision. “If you don’t deliver after that big speech, people are really going to be like: ‘This is not a credible Fed,’” said Omair Sharif, president of Inflation Insights. The administration’s desire for cheaper credit could also be undermined if the Fed refuses to act. Economists say a hike could reassure bond investors that policymakers are serious about inflation, potentially lowering longer-term borrowing costs by reducing the risk of even harsher action later. Ten-year Treasury yields are especially important to households and businesses because they influence mortgage rates and other long-term loans. Joe Lavorgna, chief economist at SMBC Americas and a former senior aide to Treasury Secretary Scott Bessent, said the Fed should focus on the economy’s underlying health rather than political pressure. “In a perverse way, if the Fed did not hike, it would probably get more of the reaction that the president would not like,” Lavorgna said. Inflation has remained above the Fed’s 2% target amid the effects of Trump’s tariffs, stronger consumer spending and renewed energy-price pressures linked to the Middle East conflict. Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott, said markets will be watching for whether the “Warsh Fed” is prepared to fight inflation through action rather than speeches. For consumers, the outcome could bring a familiar tradeoff: higher rates on credit cards, car loans and other borrowing in the short term, but a possible defense against the steady erosion of purchasing power. The Fed’s policymakers are scheduled to meet Sept. 15 and 16.