The market is generally expecting the Federal Reserve (Fed) to keep interest rates unchanged at its FOMC meeting on Wednesday. In an interview with BeInCrypto, former advisor to President Reagan, Steve Hanke, also agreed with this assessment, citing Dai inflation as the main reason.
Hanke argued that increasing policy uncertainty has distorted U.S. economic priorities. He believes this impact extends beyond monetary policy to include trade, currency markets, and even global confidence in U.S. leadership.
The Fed kept interest rates unchanged amid political pressure.
Ahead of the upcoming FOMC meeting, the majority of opinions suggest that the Fed will not lower interest rates.
This decision comes amid ongoing pressure from the Trump administration, which has emphasized its desire for the Fed to cut interest rates soon .
Hanke supported the Fed's decision, arguing that inflation was the most understandable reason for this policy.
“The threat of inflation in the US remains, and it’s not yet fully under control. Although inflation has decreased, it hasn’t fallen further in the last six months, and I even predict it will trend upwards,” Hanke told BeInCrypto, adding, “The reason is that monetary policy is gradually becoming more relaxed, partly due to pressure from the White House.”
Earlier this month, the US Department of Justice (DOJ) launched a criminal investigation into Federal Reserve Chairman Jerome Powell. Less than a year prior, the DOJ had also investigated Federal Reserve Commissioner Lisa Cook in connection with mortgage fraud.
Instead of forcing the Fed to compromise, Hanke argues that these pressures only strengthen the Fed's resolve.
"With Powell facing threats of criminal prosecution, I think the Fed's internal stance will become even more resolute in not letting Trump get the better of them," he said.
Hanke stated that this "resistance" trend is not limited to monetary policy but has spread to many other economic policies of the US administration.
Global trade protests are undermining American influence.
Since his second term, Trump has repeatedly threatened to impose tariffs on trading partners , using it as leverage to gain an advantage in trade and foreign policy negotiations.
Initially, this strategy was effective, but more and more countries are starting to react. For example, last week, Trump threatened to impose tariffs on eight European countries if they did not agree to the US proposal to buy Greenland .
The European Union immediately rejected the proposal. Just hours after Trump's speech at the World Economic Forum in Davos, the US withdrew its tariff threat .
Other countries responded by signing new trade agreements.
Canada has just finalized a trade agreement with China and is also negotiating an agreement with India. Meanwhile, the European Union and India have announced a separate free trade agreement.
“It’s ironic that the US – the symbol of liberal capitalism – is shifting towards protectionism, interventionism, and going against free markets. Meanwhile, China, the world’s largest Capital country, is pivoting toward free trade and markets,” Hanke commented. And India, once known for its protectionism and strong interventionism, is now also moving toward market liberalization.”
The increasing number of countries reacting to tariff pressure has called into question the economic leadership Vai of the United States. In this context, the US dollar is also under pressure . While Hanke believes concerns about a weakening dollar are somewhat exaggerated, he warns that continued trade policies will gradually erode confidence in the USD over time.
The recent price surges in precious metals suggest that the market seems to have begun preparing for this scenario.
