Markets widely expect the Federal Reserve to hold interest rates steady at Wednesday’s FOMC meeting. In an interview with BeInCrypto, former Reagan advisor Steve Hanke agreed, citing persistent inflation.
Hanke argued that growing policy uncertainty has distorted US economic priorities. He said the effects are no longer confined to monetary policy but are increasingly visible in trade, currency markets, and global confidence in US leadership.
Sponsored
Fed to Hold Rates Amid Political Pressure
Ahead of the next FOMC meeting, there is widespread expectation that the Federal Reserve will not cut interest rates.
The decision will come amid significant pushback from the Trump administration, which has reiterated its desire for the Fed to cut interest rates.
Hanke sided with the Fed, looking at inflation as the natural explanation.
Sponsored
Earlier this month, the Department of Justice (DOJ) initiated a criminal probe into Fed Chair Jerome Powell. The news came less than a year after the DOJ opened another criminal inquiry into Fed governor Lisa Cook for mortgage fraud.
Rather than prompting the Fed to comply, Hanke said the pressure is likely to reinforce the central bank’s resolve.
Hanke said this pattern of resistance extends beyond monetary policy, reaching other parts of the administration’s economic agenda.
Sponsored
Global Trade Pushback Weakens US Influence
Since the start of his second term, Trump has repeatedly threatened trading partners with US tariffs, using them as leverage to extract concessions in trade and foreign policy negotiations.
While these tactics initially proved effective, countries have increasingly pushed back. A recent example occurred last week, when Trump threatened to impose tariffs on eight European countries unless they agreed to the US purchase of Greenland.
The European Union rejected the proposal outright, and within hours of Trump’s speech at the World Economic Forum in Davos, the tariff threat was withdrawn.
Other countries are pushing back through new trade agreements.
Sponsored
Canada recently agreed to a trade deal with China and is now in negotiations to strike one with India as well. Meanwhile, the European Union and India announced a separate free trade agreement.
As countries increasingly resist tariff pressure, perceptions of US economic dominance waver. In that context, the dollar comes under pressure. While Hanke said concerns about dollar weakness are often overstated, he warned that continued trade policies could gradually erode confidence.
Recent rallies in precious metals have suggested markets are already positioning for that outcome.
Source: https://beincrypto.com/steve-hanke-trump-tariff-fed-rate-cuts-economic-crisis/
