National Economic Council director Kevin Hassett says the June consumer price index undercuts any argument for raising interest rates and expects Fed Chair Kevin Warsh to steer policy toward the appropriate path.
National Economic Council Director Kevin Hassett told CNBC that the latest U.S. inflation data removes the case for raising interest rates and could push the Federal Reserve to consider easing policy if the trend holds. Hassett described June’s consumer price index (CPI) report as “one of the best inflation reports that I’ve seen in my entire career.”
Hassett said on Squawk Box that, given the unexpectedly large decline in consumer prices, “There’s not really an excuse for raising rates right now.” He added the White House expects Fed Chair Kevin Warsh — President Donald Trump’s nominee who began his term in late May — will “drive the committee to the right answer.”
Market Reaction
The CPI released Tuesday showed a seasonally adjusted 0.4% decline for June and an annual inflation rate of 3.5%, the Bureau of Labor Statistics reported. That drop was the largest decrease in consumer prices in more than six years and undershot Dow Jones economists’ expectations. Hassett credited the administration’s policies for part of the improvement and noted price declines were not solely driven by changes in oil prices.
Why It Matters
Hassett’s comments align with President Trump’s public push for faster rate cuts to lower borrowing costs and stimulate growth. If policymakers take recent CPI readings as a durable disinflation signal, the Fed could shift from a tightening stance toward considerations of rate reductions — a move Hassett signaled he expects should data continue to trend the same way.
Context & Background
Hassett emphasized the breadth of the CPI improvement and cited factors including improved law-and-order policies that, in his view, have lowered insurance costs in cities by reducing theft. He linked those factors to lower costs for consumers, contributing to the CPI decline.
Leadership and Fed Response
Fed Chair Kevin Warsh was measured in congressional testimony following the CPI release. Speaking to the House Financial Services Committee, Warsh cautioned against interpreting one data point as definitive: “There might be some that look at this morning’s data and say, ‘Oh, mission accomplished, everything is swell.’ That is not my view,” he said, underscoring a cautious stance despite the favorable inflation print.
Key Quotes
- “There’s not really an excuse for raising rates right now,” — Kevin Hassett, National Economic Council director.
- “One of the best inflation reports that I’ve seen in my entire career,” — Kevin Hassett on June CPI.
- “That is not my view,” — Fed Chair Kevin Warsh, on treating a single CPI report as conclusive.
What’s Next
Hassett framed the CPI report as a potential inflection point for monetary policy if subsequent data confirm the trend. Warsh’s public caution signals the Fed will weigh a broader data set before changing policy direction.
Bottom Line for Traders
The June CPI’s sizable monthly decline and lower annual inflation rate have shifted the policy conversation. Hassett interprets the data as removing justification for further rate increases and possibly supporting future cuts if the trend persists; Warsh remains cautious, emphasizing the need for confirmation across multiple data releases.
