Federal Reserve chairman candidate Hassett: The pace of U.S. interest rate cuts is far behind other central banks.

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Hassett, considered a leading candidate for Fed Chair, believes that the AI boom is driving economic growth while suppressing inflation, and that the United States is lagging far behind other central banks globally in terms of rate cuts.

On Tuesday, Hassett, Senior Economic Advisor at the White House, stated that although U.S. economic growth in the third quarter far exceeded expectations, the pace of Fed rate cuts is still not fast enough. He called the strong GDP data "an excellent Christmas gift for the American people."

Wallstreetcn mentioned that the U.S. Department of Commerce reported a sharp 4.3% growth in real GDP for the third quarter on Tuesday, the fastest in two years, beating the Dow Jones market expectation of 3.2%. Hassett attributed 1.5 percentage points of the growth to President Trump’s tariff policies, which reduced the U.S. trade deficit.

Hassett emphasized that the AI boom is driving economic growth while putting downward pressure on inflation. He said:

If you look at central banks around the world, the United States is far behind in terms of rate cuts.

Hassett’s comments highlight the divergence between the White House and the Federal Reserve on the pace of monetary policy. On December 10, the Fed cut rates by 25 basis points, the third rate cut this year, but indicated that future rate cuts might slow down, with three Fed governors voting against the cut.

Economic growth attributed to trade policy and AI investment

In a media interview, Hassett elaborated on the causes of the strong GDP data.

He emphasized that Trump’s trade policy and investment in artificial intelligence are the main drivers of economic growth. Hassett stated:

This is indeed an outstanding figure; it’s an excellent Christmas gift for the American people. The economic recovery is really beginning to accelerate, with large numbers of people returning to the labor force...If we continue with 4% GDP growth in the New Year, monthly job growth will return to the range of 100,000 to 150,000.

Although economic performance in the third quarter was strong, this year’s monthly job growth has dropped sharply compared to last year. Data released by the Labor Department last week showed that nonfarm payrolls increased by 64,000 in November, while October saw a decrease of 105,000.

Economists attribute this trend to Trump’s crackdown on illegal immigration—which has led to a drop in the number of immigrants—as well as weak labor demand.

Reiterating the need for the Fed to accelerate rate cuts

As one of four finalists to succeed Powell, Hassett reiterated his call to lower the Fed policy rate, believing that productivity gains from AI will hold down inflation.

At its December meeting, the Federal Reserve cut rates by 25 basis points, marking the third cut this year. But this decision saw the most dissenting votes since 2019, with three Fed governors voting against. After the meeting, Powell said the rate cut decision was "a difficult choice."

Trump has repeatedly criticized the Fed for not cutting rates quickly enough. Hassett’s nomination has raised concerns among some Fed watchers, who believe his relationship with the President is too close. Hassett told the media last week that the Fed’s independence is "very important."

In a national address last week, Trump said he would soon announce his nominee for Fed Chair and emphasized that he would choose someone who "firmly believes rates should be cut substantially."

Consumer confidence diverges from economic data

Another report released Tuesday by the Conference Board shows that U.S. consumer confidence deteriorated in December, with mounting anxiety about jobs and income.

A YouGov poll released Sunday shows Trump’s approval rating on economic issues stands at 37%.

Asked about the decline in Trump’s economic approval rating, Hassett said public sentiment is often disconnected from economic data. He stated:

Ultimately, I think this is largely related to news coverage and how people process and understand the outside world.

Hassett noted that while consumer sentiment may not directly reflect economic indicators, there is reason for consumers to remain optimistic about slowing inflation and rising wages. He mentioned that Trump plans to announce a housing plan sometime in 2026, though specific details were not disclosed.

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