Kevin Hassett, Director of the White House National Economic Council, stated on Wednesday that the latest economic data, particularly the "exceptionally strong" inflation report, provides absolutely no reasonable basis for the Federal Reserve to raise interest rates.
Hassett said, "There is no case for a rate hike at all right now."
He indicated that if upcoming economic data follows the current trend, the direction of Fed policy should shift towards cutting rates.
Hassett added that the White House expects Federal Reserve Chair Kevin Powell to guide the Federal Open Market Committee toward making realistic and correct policy choices. Powell, nominated by President Trump, officially assumed the role of Fed Chair in late May.
Hassett's stance advocating for rate cuts aligns closely with the long-standing demands of President Trump. Trump has repeatedly urged the Fed to cut rates quickly to boost the economy and reduce borrowing costs across society.
A day earlier, the U.S. Bureau of Labor Statistics released the latest Consumer Price Index (CPI), a measure covering prices for a wide range of goods and services across the nation, which came in significantly below market expectations.
The data showed that the seasonally adjusted CPI for June fell 0.4% month-over-month, with the annual U.S. inflation rate dropping to 3.5%, markedly better than the prior forecast by Dow Jones economists; this also marks the largest monthly decline in U.S. consumer prices in over six years.
In his Wednesday interview, Hassett commented, "This is the best inflation report I've seen in my career."
He attributed the decline in inflation to policy measures by the Trump administration and noted that the fall in prices is not solely due to lower oil prices resulting from U.S. military action against Iran.
"After my team and I dug deeply into the data, we found that President Trump's focus on strengthening law and order in major cities has led to a significant drop in car thefts, which in turn has noticeably lowered auto insurance premiums. This is also an important factor in reducing inflation," Hassett explained.
However, Fed Chair Powell, in his congressional testimony on Tuesday, did not become complacent or rush to declare victory based on this favorable inflation data.
Testifying before the House Financial Services Committee on Tuesday, Powell stated, "Some market participants seeing this morning's data might think 'the inflation fight is over, everything looks good,' but I don't share that assessment."
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