Defending Trump by calling a deer a horse? "New Fed News Agency" criticizes Federal Reserve Chairman frontrunner Hassett

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Nick Timiraos, a veteran Federal Reserve reporter known as the "new Fed whisperer," posted on social media X on Friday, criticizing recent remarks by President Trump's chief economic advisor, Kevin Hassett, who defended Trump's questioning of the Fed's independence.

Timiraos pointed out that Kevin Hassett, director of the White House National Economic Council, both defended the Fed's independence in a recent media interview, calling it "undoubtedly important," while at the same time excusing Trump's questioning of the Fed's independence, claiming that the party with bias is actually the Fed. Some of his accusations even contradicted his own previous statements.

Timiraos argued that, given Hassett is a hot candidate for the next Fed chair, his criticism of the Fed is quite inappropriate. Timiraos questioned in a tweet: “What is the evidence for such accusations?”

This controversy once again highlights the complex stance on the sensitive topic of the Fed’s independence within the Trump administration, and also reflects the market’s focus on the direction of future monetary policy.

Questioning the Fed's Performance During Inflation

According to Timiraos’ summary, Hassett’s first accusation in the interview was that the Fed’s misjudgment of inflation forecasts in 2021 proved its partisan bias. Hassett said in the interview: “The (Fed) governors themselves have been acting in a partisan way — for example, letting inflation under the Biden administration completely get out of control...”

However, Timiraos pointed out an “interesting detail”: During Biden’s administration, five out of six Fed governors were appointed during Trump’s first presidential term, including current Fed Chair Powell, former Fed vice chair Clarida, former vice chair for supervision Quarles, current governor Waller, and vice chair for supervision Bowman.

Timiraos noted that Hassett should be quite familiar with this, as the first four of the above were nominated when Hassett was serving as chairman of the Council of Economic Advisers. During this period, only one governor — Brainard — was appointed during the Obama administration.

Timiraos also pointed out that once the Fed realized its monetary policy stance was clearly off track, it began to raise rates sharply. Governors appointed by Biden began to fill vacancies in the second quarter of 2022, with Cook and Jefferson joining the board before the Fed’s first 75-basis-point hike in June 2022. Former vice chair for supervision Barr also voted to support the following three 75-basis-point hikes in July 2022.

Controversy Over Timing of Policy Tightening

Hassett’s second accusation was that the Fed did not begin tightening monetary policy until after Biden nominated Powell to continue serving as Fed chair. The nomination was announced on November 22, 2021, and Biden informed Powell of the decision on November 19.

In response, Timiraos countered that, although there is debate over the definition of tightening monetary policy, the Fed had already announced on November 3, 2021, to start reducing bond purchases (the so-called Taper) earlier that month. The next day, Biden met with Powell and Brainard. This indicates that the timing of ending the easing policy was more concurrent rather than sequential.

Motivation for Rate Cuts Before Election Questioned

Hassett’s latest third accusation against the Fed is that it unexpectedly cut rates before last year’s election to help boost Democratic presidential candidate Harris's chances of winning.

But Timiraos found that Hassett did not express such a view last year. In fact, in a media interview a year earlier, he defended the decision, calling the rate cut “a very wise decision based on the data they had at the time.”

Public reports show that Hassett said in an interview in October 2024:

“The history books will call it a mistake, but I think, when you are grading policy makers, you need to understand the situation they were facing at the time. To me, I wouldn't give them a low grade for what they did in September, even though looking back, they might wish they hadn't done it.”

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