Hassett Opposes Rate Hike Citing Slowing Inflation

White House economic adviser Kevin Hassett expressed his opposition to a potential Federal Reserve rate hike, citing a sharp slowdown in recent inflation. In an interview with CNBC, Hassett stated that he would vote against a rate hike if he were on the central bank's policy committee. He emphasized the need for the Fed to consider more than just strong economic growth when making monetary policy decisions.

Hassett pointed out that the current three-month trend in core Consumer Price Index (CPI) averaged about 0.2% annualized, which is lower than previous readings. This suggests that inflation may be easing, rather than continuing to rise. Hassett also expressed his confidence in new Fed chair Kevin Warsh's commitment to evidence-based decision-making.

Not everyone agrees with Hassett's view, however. Former Cleveland Fed President Loretta Mester argued that a rate hike is necessary to combat high inflation and maintain the Federal Reserve's dual mandate of maximum employment and price stability. She cited strong demand growth, continued investment, and resilient consumer spending as evidence supporting tighter monetary policy.