National Economic Council Director Kevin Hassett said Tuesday that the Federal Reserve is not cutting interest rates quickly enough, even though the U.S. economy grew at a much faster-than-expected pace in the third quarter.
Hassett, a leading contender to succeed Federal Reserve Chair Jerome Powell when his term ends in May, said the artificial intelligence boom is boosting economic growth while simultaneously putting downward pressure on inflation.
“If you look at central banks around the world, the U.S. is way behind the curve in terms of lowering rates,” the top White House economic advisor told CNBC in a “Money Movers” interview.
U.S. economic growth came in at an annual rate of 4.3% in the third quarter, faster than the Dow Jones consensus of 3.2%. Hassett said 1.5% of that growth was due to President Donald Trump’s tariffs reducing the U.S. trade deficit.
The Fed lowered interest rates by a quarter point on Dec. 10, the third cut this year, but the central bank indicated that the pace of future reductions could be slower.
Three Fed governors voted against the quarter-point move, the most dissents since 2019. After this month’s meeting, Powell said the decision to cut a quarter point was a “close call.”
Trump has repeatedly bashed the Fed for not lowering rates as quickly as he would like. Hassett’s candidacy has raised concerns among some Fed watchers that he is too close to the president.
Hassett told CNBC last week that the Fed’s independence is “really important.”
Trump said in an address to the nation last week that he will announce his nominee for Fed chair soon, emphasizing that he will pick “someone who believes in lower interest rates by a lot.”
The president’s prime-time speech focused on affordability. His approval rating on the economy stood at 37% in a CBS News/YouGov published Sunday.
When asked about Trump’s sagging approval rating, Hassett said public sentiment often does not reflect the economic numbers.
“In the end, it turns out that I think it has a lot to do with news coverage and how people are processing, their glimpse of the outside world,” Hassett said.