Federal Reserve's Kashkari responds to political pressure: No rate cuts in January, but independence cannot be compromised

The Federal Reserve’s internal response to political pressure is becoming clearer. Kashkari openly stated in an interview that the pressure from the Trump administration on the Fed “is actually a monetary policy issue,” and also expressed that there is no need to cut rates in January, but left room for rate cuts later this year. This statement demonstrates the Fed’s firm stance and also provides a pragmatic response to market concerns.

The Fed’s Position Under Political Pressure

Independence Issue Becomes Focus

Kashkari emphasized that the actions taken by the Trump administration against the Fed over the past year “are actually a matter of monetary policy.” This statement is key — he is redefining political pressure as a technical policy issue, attempting to explain and respond to political interference through monetary policy logic. He sees this as an opportunity to explain to the American people the importance of the Fed’s independence, implying that the Fed needs to defend its independence at this moment.

Previously, the Department of Justice led a criminal investigation into Fed Chair Powell, which is extremely rare in Fed history. Kashkari’s remarks can be seen as an internal response to this unprecedented political pressure — emphasizing the necessity of independence rather than directly opposing it.

Subtle Adjustment of Rate Cut Expectations

Regarding rate cuts, Kashkari’s statements contain three implications:

• Clear stance in January: believes there is no need to cut rates in January
• Flexibility within the year: adds that there may still be room for rate cuts later this year
• Current timing is premature: states that “it’s too early” now

This wording both blocks expectations of a rate cut soon and leaves room for future policy adjustments. Compared to the Fed’s policy trajectory last year, this reflects a cautious attitude toward rate cuts amid the trade-off between inflation pressures and economic resilience.

Actual Market Impact

Signal of Stable Interest Rate Expectations

Kashkari’s remarks largely confirm that the Fed is unlikely to cut rates hastily in the near term. This implies that short-term interest rate expectations in the bond market will remain relatively stable, and for the crypto market, it means there won’t be a significant liquidity surge due to expectations of rate cuts.

Pricing of Political Risks

From a market perspective, Kashkari’s comments also send a signal: the Fed is working to maintain its independence and will not change its policy stance due to political pressure. This helps stabilize expectations regarding the Fed’s credibility.

What to Watch Next

Kashkari’s speech is scheduled for 1:00 AM on January 15, when more detailed viewpoints may be expressed. Additionally, the Fed will release the Beige Book on January 15, which could provide further basis for upcoming policy decisions.

From a policy rhythm perspective, the Fed faces a delicate balance: responding to political pressure while maintaining policy independence and effectiveness. Kashkari’s statement indicates that the Fed is trying to maintain this balance by emphasizing the importance of independence rather than passively accepting pressure.

Summary

Kashkari’s remarks reflect the Fed’s policy stance during a special moment: on one hand, firmly defending independence; on the other, maintaining a pragmatic attitude toward rate cuts. The decision to hold off on rate cuts in January seems almost certain, but the possibility of rate cuts later in the year provides the market with some flexibility expectations. For the crypto market, the short-term interest rate environment remains relatively stable, but attention should be paid to how the Fed responds to ongoing political pressure and whether this will be reflected in future policy actions.