Hassett Critiques Fed's Slow Rate Cuts Amid Economic Growth

Dec 24, 2025, 2:28 AM

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Kevin Hassett, the National Economic Council Director and a leading candidate to succeed Jerome Powell as Federal Reserve Chair, expressed concerns that the Federal Reserve is not acting swiftly enough to lower interest rates. This statement comes in light of the US economy's unexpected growth, which surged at an annual rate of 4.3% in the third quarter, significantly surpassing the Dow Jones consensus forecast of 3.2%.

Hassett pointed out that the rapid advancements in artificial intelligence are contributing to economic growth while simultaneously exerting downward pressure on inflation. He stated, "If you look at central banks around the world, the US is way behind the curve in terms of lowering rates," during an interview on CNBC's "Money Movers".

Despite the robust economic performance, the Federal Reserve only implemented a quarter-point interest rate cut on December 10, marking the third reduction of the year. This decision was met with dissent from three Fed governors, the highest number of dissenting votes since 2019, indicating a growing divide within the central bank regarding monetary policy direction.

Hassett attributed approximately 1.5 percentage points of the recent economic growth to President Donald Trump's tariffs, which have helped reduce the trade deficit. However, he acknowledged that the Fed's cautious approach to rate cuts may not align with the current economic momentum. The Fed's Chairman Powell described the decision to cut rates as a "close call," reflecting the internal debate over the pace of monetary easing.

President Trump has been vocal in his criticism of the Fed for not lowering rates more aggressively, asserting that higher borrowing costs disadvantage the US economy compared to other nations. Hassett's candidacy has raised concerns among some observers about potential political influence on the Fed, although he has emphasized the importance of the central bank's independence in separate interviews.

The economic landscape remains complex, with strong consumer spending and business investment contributing to growth, yet concerns about inflation persist. The personal consumption expenditures price index rose to 3.4% in the third quarter, up from 2.1% in the previous quarter, indicating that inflationary pressures are still a significant factor in economic discussions.

As the Fed navigates these challenges, the upcoming nomination for the next chair could have lasting implications for US monetary policy. Hassett's views reflect a broader debate about the balance between stimulating growth and managing inflation, a critical issue as the economy continues to evolve in response to technological advancements and global economic conditions.

In conclusion, Hassett's critique of the Fed's rate-cutting pace highlights the tension between economic performance and monetary policy. As the US economy shows signs of strength, the question remains whether the Fed will adjust its approach to align with the current economic realities and pressures from the administration.

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