National Economic Council Director Kevin Hassett on Thursday backed the Federal Reserve’s decision to lower interest rates by a quarter percentage point, which fell far short of the steep cuts President Donald Trump requested.
The Federal Open Market Committee on Wednesday announced the bank would lower rates for the first time since Trump assumed office, albeit by a much slimmer margin than the president has called for. Since taking power in January, Trump has called on the central bank to lower rates by up to three percentage points, arguing that doing so would stimulate economic growth, including boosting the housing market.
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However, Hassett framed Powell’s decision as a “prudent” move during a CNBC interview, saying, “the bottom line is that moving kind of slow and steady and heading towards the target, watching the data come in, that’s what prudent policy is.”
“It’s much more prudent for the Fed to be looking at all the models, to have a diversity of opinions and to decide, what are we going to do in this economy that really looks to be taking off with inflation that’s decelerating but higher than target,” Hassett said Thursday morning. “I think that they split the baby in this decision. And I think that’s probably a pretty prudent call.”
In the past, Hassett has been noted for comments defending the central bank’s ability to operate free from political influence, including from Trump.
On Thursday, he conceded that some in the Trump administration, such as new Fed Governor Stephen Miran, wanted interest rates to go lower, but argued that the ultimate decision to stick with a 0.25% decrease reflected a “pretty broad consensus.” Miran pushed for a half-point cut but was outvoted 11 to 1 on the Federal Open Market Committee.
“I know that my colleague Stephen wanted to go to 50 [basis points], but I think 25 was pretty broad consensus, and I think that’s a good first step in the right direction to much lower rates,” Hassett said.
Trump has pushed for a 1% interest rate. This week, the central bank lowered the rate to a range of 4% to 4.25%, down from 4.25% to 4.50%.