On Tuesday, National Economic Council Director Kevin Hassett remarked that the Federal Reserve is not promptly reducing interest rates, despite the U.S. economy expanding at a significantly quicker-than-anticipated rate in the third quarter.
Hassett, a prominent candidate to take over as Federal Reserve Chair Jerome Powell when his term concludes in May, stated that the artificial intelligence surge is enhancing economic growth while also exerting downward pressure on inflation.
“When you observe central banks globally, the U.S. is significantly lagging in terms of rate reductions,” the leading White House economic advisor told CNBC during a “Money Movers” interview.
U.S. economic growth hit an annual rate of 4.3% in the third quarter, outpacing the Dow Jones forecast of 3.2%. Hassett mentioned that 1.5% of this growth stemmed from President Donald Trump‘s tariffs decreasing the U.S. trade deficit.
The Fed reduced interest rates by a quarter point on Dec. 10, marking the third reduction this year, but hinted that future cuts may proceed at a slower pace.
Three Fed governors opposed the quarter-point adjustment, recording the highest level of dissent since 2019. Following this month’s meeting, Powell remarked that the decision to lower rates by a quarter point was a “close call.”
Trump has frequently criticized the Fed for not cutting rates as swiftly as he desires. Concerns have been raised among some Fed observers about Hassett’s candidacy being too aligned with the president.
Hassett informed CNBC last week that the Fed’s autonomy is “extremely important.”
In a national address last week, Trump announced that he would soon reveal his nominee for Fed chair, asserting that he would select “someone who strongly supports significantly lower interest rates.”
The president’s prime-time speech centered on affordability. His economic approval rating was at 37% in a CBS News/YouGov poll released on Sunday.
When questioned about Trump’s declining approval rating, Hassett noted that public perception frequently does not align with economic indicators.
“Ultimately, it seems that much of it relates to news coverage and how individuals are interpreting their insights of the world around them,” Hassett said.
