Kevin Hassett on Fed Rate Cuts, Inflation, and AI Regulation Strategy

Source: CryptoNewsNet Original Title: Anticipated New Fed Chair Kevin Hassett Makes Remarks Ahead of Interest Rate Decision Original Link: Ahead of the Fed’s interest rate meeting this week, White House National Economic Council Director Kevin Hassett delivered striking messages on monetary policy, inflation, the “affordability” agenda, and President Trump’s economic and artificial intelligence plans.

Hassett stated that current Chairman Jerome Powell is “well-managing” the Federal Open Market Committee (FOMC) and believes a 25 basis point rate cut would be appropriate at this meeting. He noted that Powell “managed to rally” committee members toward the midpoint indicated by futures markets. However, Hassett refrained from offering numerical guidance on the potential interest rate path, saying, “We still have incomplete data due to the government shutdown, and we need to see the back-to-back employment reports. Committing now for six months would be irresponsible.”

Hassett stated that inflation still hovering around 3% is “the fundamental question on everyone’s mind,” with the debate increasingly centered around “affordability.” He noted that despite 20-23% of price increases occurring during the Biden administration, there has been a gradual recovery in real living standards this year, with the average American’s purchasing power increasing by approximately $1,200 by 2025.

Real wages have risen by around 2.5 percent annually in recent months, reflecting “positive supply shocks.” Hassett argued that artificial intelligence (AI) and productivity advancements can support growth while reducing price pressures, much like productivity growth from information technologies in the 1990s. He emphasized, “Inflation hurts everyone in the economy, and the last election was largely a vote on inflation.”

Hassett explained that the Trump administration’s “affordability” agenda is being addressed through both prices and financing conditions. One goal is to further reduce mortgage and auto loan interest rates through Fed actions. He noted that movements in long-term interest rates and 10-year bond yields are sensitive to the Fed’s communication and market inflation expectations. The bond market is “in a much better place” compared to the beginning of the year, with room for further reductions in 10-year yields if inflation declines alongside growth.

The White House plans to announce “a lot of positive news” on the economic front this week. Approximately 30 trillion dollars in new factory and investment announcements from the Trump era are now in groundbreaking stages. Tax policy changes, including tax exemptions for tips and overtime, are expected to provide the average worker an additional $1,600-$2,000 next year. Hassett recalled that household incomes increased by $6,500 following Trump’s tax cuts in his first term, stating, “Ultimately, people will look in their wallets and say, ‘This president made me better off.’”

Hassett also addressed the executive order on artificial intelligence that President Trump plans to sign this week. Referencing Trump’s message about winning the AI race with “a single rulebook,” Hassett said some states want to regulate AI companies “for life” and impose heavy fines, which could become a revenue extraction method for state governments. Trump is unwilling to allow this fragmented approach. The executive order will create “a single, clear set of rules for US AI companies nationwide; companies won’t have to obtain 50 different approvals in 50 states.”

When asked about a potential Fed chairmanship, Hassett avoided direct answers but said he gave President Trump “100% support” and was ready to serve regardless of the decision. Contrary to market debate, Hassett argued that Trump faced “a guaranteed good choice, not a difficult one.” He praised current Fed member Christopher Waller as “one of the best monetary policy theorists of the last generation,” Michelle Bowman as “the best regulator in the world,” and Kevin Warsh as “one of the most experienced Fed members.” He concluded, “Whichever name the president chooses, he will be making a good decision.”