National Economic Council Chairman Kevin Hassett said Tuesday that the Federal Reserve is not cutting interest rates fast enough, even though the U.S. economy grew much faster than expected in the third quarter.
Hassett, a leading candidate to replace Federal Reserve Chairman Jerome Powell, whose term ends in May, said the artificial intelligence boom was boosting economic growth while also putting downward pressure on inflation.
“If you look at central banks around the world, the United States is way behind in terms of cutting interest rates,” the top White House economic adviser said in an interview on CNBC’s “Money Movers.”
The U.S. economy grew at an annual rate of 4.3% in the third quarter, beating the Dow Jones consensus of 3.2%. Hassett said 1.5% of this growth was due to President Donald Trump’s reduction in the U.S. trade deficit due to tariffs.
The Federal Reserve cut interest rates by a quarter of a point on Dec. 10, the third cut this year, but the central bank has signaled that the pace of future cuts may slow.
Three Fed directors voted against the quarter-point cut, the highest number of negative votes since 2019. After this month’s meeting, Chairman Powell called the decision to cut rates by a quarter of a point a “close call.”
President Trump has repeatedly criticized the Fed for not cutting interest rates as quickly as he hoped. Mr. Hassett’s candidacy has raised concerns among some Fed watchers that he is moving too close to the president.
Hassett told CNBC last week that the Fed’s independence is “very important.”
In his address to the nation last week, President Trump said he would soon announce a candidate for Federal Reserve chairman, stressing that he would choose “someone who believes in significantly lower interest rates.”
The president’s prime-time speech focused on affordability. His approval rating on the economy was 37%, according to CBS News/YouGov published Sunday.
Asked about President Trump’s slumping approval ratings, Hassett said public opinion often does not reflect economic numbers.
“At the end of the day, I find that I think it has a lot to do with news reporting and how people process glimpses of the outside world,” Hassett said.
