Fed chair candidate Hassett says U.S behind the curve on lowering rates

The Fed did not cut interest rates fast enough even though the U.S. economy grew much faster than expected in the third quarter, National Economic Council Director Kevin Hassett said Tuesday.

The White House’s top economic adviser is seen as a leading candidate to replace Federal Reserve Chairman Jerome Powell after his term ends in May. Hassett said that while the artificial intelligence boom is increasing economic growth, it is also putting downward pressure on inflation.

“If you look at central banks around the world, the U.S. is way behind in terms of lowering rates,” Hassett told CNBC in a “Money Movers” interview.

US economic growth was 4.3% in the third quarter, faster than Dow Jones’ forecast of 3.2%. Hassett said 1.5 percent of that growth was due to President Donald Trump’s tariffs that reduced the U.S. trade deficit.

The Fed cut interest rates by a quarter point on December 10, its third cut this year, but the central bank stated that the pace of future reductions could be slower.

Three opposing votes were cast in the central bank’s decision for the first time since 2019. Powell said the quarter-point cut was a “close call.”

Trump has repeatedly criticized the Fed for not lowering interest rates as quickly as he wanted. Hassett’s candidacy has raised concerns among some Fed watchers that he is too close to the president.

Hassett told CNBC last week that the Fed’s independence is “really important.”