National Economic Council Director Kevin Hassett says recent CPI data argues against hiking interest rates and expects Fed Chair Kevin Warsh to guide the Federal Reserve toward the appropriate policy response.
National Economic Council Director Kevin Hassett told CNBC that the June consumer price index and other recent economic data leave “no excuse” for the Federal Reserve to raise interest rates and that the central bank may move toward cutting rates if the trends persist. Hassett also said he expects Fed Chair Kevin Warsh—President Donald Trump’s appointee who took office in late May—to lead the policy committee to the “right answer.”
Market Reaction
- The interview followed the CPI release, which the source reports as a sizable monthly decline and a lower year-over-year inflation rate. Hassett said that, given these data, “there’s not really an excuse for raising rates right now.”
- Hassett added the White House expects Chair Warsh “is going to drive the committee to the right answer,” signaling confidence in the Fed chair’s policy stewardship.
Why It Matters
Clearer inflation readings influence the Federal Reserve’s stance on interest rates. Lower or falling CPI typically reduces near-term pressure on the Fed to tighten monetary policy, which can affect borrowing costs, bond yields and investor positioning. Hassett framed the CPI decline as evidence supporting looser policy or rate reductions if the trend continues.
Context & Background
- The June CPI print: a seasonally adjusted 0.4% decrease and a 3.5% annual rate, per the Bureau of Labor Statistics, and described in the source as the steepest monthly decline in over six years.
- Hassett credited administration policies for part of the improvement and noted declines were not solely tied to oil-price moves related to developments in the U.S. conflict with Iran.
- Warsh offered a more cautious public read during testimony before the House Financial Services Committee, warning against overinterpreting a single report: “There might be some that look at this morning’s data and say, ‘Oh, mission accomplished, everything is swell.’ That is not my view.”
Leadership and Governance
Hassett explicitly tied confidence in Fed policy direction to Warsh’s leadership, referencing the Fed chair by name and the White House’s expectation that Warsh will guide the Federal Open Market Committee toward the correct policy decision.
Key Quotes
- Kevin Hassett on CNBC: “There’s not really an excuse for raising rates right now.”
- Hassett on the CPI: “One of the best inflation reports that I’ve seen in my entire career.”
- Fed Chair Kevin Warsh in House testimony: “There might be some that look at this morning’s data and say, ‘Oh, mission accomplished, everything is swell.’ That is not my view.”
What’s Next
The source ties the debate over policy direction directly to ongoing data flow. Hassett said the Fed will “be thinking the other way” — toward lower rates — if the recent data trends continue. Warsh’s public caution suggests the Fed will weigh additional information before changing policy.
Bottom Line for Traders
Based on the source coverage, the latest CPI decline reduced near-term rationale for a Fed rate increase and increased discussion about the potential for looser policy if the data trajectory persists. Market participants should note the contrast between the White House’s outlook and the Fed chair’s more cautious stance as data arrives.
