Hassett: "Powell Skillfully Coordinated FOMC Differences... Seems to Have Led to the Right Answer"

Chairman of the White House NEC
Reaffirms Fed's Existing Stance on Rate Direction
"Cautious Approach Needed: Decisions Should Be Data-Driven Next Year"

Kevin Hassett, Chairman of the White House National Economic Council (NEC), praised Federal Reserve Chair Jerome Powell on December 8 (local time) for skillfully coordinating differing opinions among committee members ahead of the Federal Reserve's upcoming policy rate decision. At the same time, he reaffirmed the existing direction of "rate cuts" and stated that Chair Powell is also likely to agree with this approach.

On Interest Rates: "Further Cuts Are the Right Direction"

In an interview with CNBC that day, Chairman Hassett said, "It appears that Jerome Powell has done a good job coordinating the Federal Open Market Committee (FOMC) members." He added, "There were diverse opinions within the committee, but Chair Powell managed to bring them together and steer them toward the direction already reflected in the futures market, which is the 'correct answer.'"

The Federal Reserve will hold its FOMC meeting on December 9-10 to decide whether to adjust the policy rate. The current policy rate stands at 3.75-4.00%. According to the Chicago Mercantile Exchange (CME) FedWatch Tool, as of December 8, the federal funds futures market is reflecting an 89.4% probability of a 25 basis point (1bp = 0.01 percentage point) rate cut in December.

Heading into the final monetary policy meeting, FOMC members have been split between dovish (favoring monetary easing) and hawkish (favoring monetary tightening) views. While concerns over a slowdown in the labor market have led to widespread expectations of a 0.25 percentage point rate cut, the persistence of inflation concerns has bolstered projections that there will be multiple dissenting votes.

Chairman Hassett also stated, "I believe Chair Powell shares my view," and reaffirmed his existing stance by saying, "It is probably appropriate to lower rates a bit further. However, this should be done cautiously while monitoring the data." Previously, Chairman Hassett had urged the Fed to cut rates by 25 basis points this month.

When asked how much the Fed would cut the policy rate this year and next, he responded, "A lot of data is missing due to the government shutdown. Employment figures will be released in succession soon," adding, "It may be disappointing, but the important thing is to keep watching the data," maintaining a cautious attitude. He continued, "The Chair's job is to monitor the data, make necessary adjustments, and explain the reasoning behind those decisions," emphasizing, "It would be irresponsible to announce now what will be done over the next six months."

"High Inflation Could Be Resolved Next Year"

Regarding worsening public opinion due to "high inflation," Chairman Hassett expressed confidence that the issue could be resolved starting next year as real household incomes increase. Previously, U.S. Treasury Secretary Scott Bessent predicted in a CBS interview on December 7 that the U.S. real GDP growth rate would end this year at around 3%.

He said, "Next year, thanks to tax-exempt policies on tips and overtime, those who benefit from these changes will gain an additional $1,600 to $2,000 in income." He added, "This change will have people looking into their wallets and saying, 'This person (President Trump) is really making my life better.'"

Chairman Hassett also emphasized that the current wave of investment in AI could bring about a "positive supply shock" similar to the computer industry boom of the 1990s. However, he added that since inflation harms everyone, it is important to approach such opportunities with caution and to continue closely monitoring inflation figures.

"Trump Prioritizes Winning the AI Competition"

Regarding President Trump's announcement of an executive order to unify regulations on the artificial intelligence (AI) industry in the United States, Chairman Hassett explained, "The President is making winning the AI competition his top priority."

He said that the measure is "intended to help AI companies clearly understand the rules of the game," and criticized, "Some states are trying to regulate AI companies so strictly that they can barely breathe and impose huge fines for minor mistakes. State governments heading toward bankruptcy due to lax fiscal management are trying to extract money from AI companies."

Meanwhile, Chairman Hassett, who is being mentioned as a candidate for the next Fed Chair, referred to other contenders such as former Fed Governor Kevin Warsh, Fed Governor Christopher Waller, and Fed Governor Michelle Bowman, stating, "The President is guaranteed to make a good choice, whoever is selected," and added, "If that choice is me, I would be happy to assist the President in his work."