Six Reasons the United States is Reluctant to Cut Interest Rates
Upcoming Presidential Election: With the Biden administration facing competition from Trump, cutting interest rates before the election could be politically risky.
Severe Inflation: Managing high inflation is critical, as it affects the Biden administration's chances of re-election and the strength of the US dollar.
Geopolitical Strategies: The US has shifted focus from smaller countries like Argentina to larger powers such as China and Russia, with ongoing conflicts providing strategic opportunities.
European Dependencies: Europe is not a viable option for economic adjustments, leading the US to focus on China instead. The reluctance to cut rates persists despite bank failures and high national debt.
Massive Foreign Debt: With $35 trillion in foreign debt, lowering interest rates could trigger capital outflows, undermining the US dollar's global dominance.
Sino-US Relations: Although relations with China have improved through negotiations, the US continues to impose restrictions. China's significant influence in Southeast Asia remains a challenge, and the US's financial stability depends on the global stance on de-dollarization. If other countries move away from the dollar, the US could face severe economic consequences.
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