Hassett: The Fed should make interest rate decisions based on data.

Comments by Fed Chairman Candidate Kevin Hassett

Kevin Hassett, Director of the White House National Economic Council, is emerging as one of the strongest candidates to succeed Fed Chairman Jerome Powell, whose term will end in May. Hassett stated that the central bank must take data into account when making interest rate decisions.

Data-Driven Decision-Making Process

In an interview with CNBC on Monday, Hassett said, “The job of the Fed chair is to monitor the data and make necessary adjustments. It would be really irresponsible to say ‘I will do this’ over the next six months.” Regarding how many interest rate cuts may be needed by 2026, he stated, “I don’t like to give the number of rate cuts, but what’s important is to monitor the data.”

Global Market Expectations

Global markets are awaiting the Fed's last interest rate decision of the year, which will be announced this week. The median expectation of economists participating in a Bloomberg survey is leaning towards a 25 basis point cut. However, President Donald Trump has criticized the Fed, and especially Powell, for not making stronger interest rate cuts to support growth.

The Future of the Fed and Market Reactions

Yesterday, Hassett stated, “I think Chairman Powell agrees with me. We should continue to lower interest rates carefully, taking into account the data a bit more.” He emphasized that members of the Federal Open Market Committee (FOMC) have differing views on the upcoming decision. As of Monday, futures indicated a 100% probability of a 25 basis point cut on Wednesday.

Uncertainties on the Road

Swap markets have lowered their expectations regarding Fed rate cuts in 2026 compared to last week. They are predicting an additional two quarter-point moves by the end of next year. Hassett also highlighted the improvement in the U.S. bond market since the beginning of the year, as well as the decline in yields since early 2025. “There is some volatility right now; this could be related to the uncertainty about what the Fed will do at this meeting and what signals they will send,” he said.