Hassett Questions Federal Reserve's Rate Hike Decision, Claims Core Inflation Nears 2%

Kevin Hassett, director of the National Economic Council, questioned the Federal Reserve's recent decision to raise interest rates during an event at Georgetown University, pointing out that the annualized core inflation rate is close to 2% and expressing confusion over why the Fed is still considering further rate hikes. Hassett criticized several Federal Reserve officials not appointed by Trump for publicly supporting continued rate increases, stating that Fed Chair Kevin Walsh is managing a "highly partisan Federal Reserve" and emphasizing that restoring the Fed's independence is a priority that Walsh needs to address. The Federal Reserve raised the target range for the federal funds rate by 25 basis points to 3.75% to 4% on September 16, marking the first rate hike of 2023. The latest forecasts indicate that 16 out of 18 officials expect at least one more rate hike will be necessary by 2026. Hassett also mentioned Fed Governor Michael Barr and former Chair Jerome Powell, noting that both remained on the board after their leadership roles ended, deviating from the past practice of chairs and vice chairs leaving the board after their terms. Barr recently stated that further rate hikes may still be necessary to drive inflation back down to the 2% target.

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