White House Economist Cites Low Inflation as Argument Against Fed Rate Hikes
National Economic Council Director Kevin Hassett argued that the U.S. economy is growing rapidly without causing inflation, citing a core CPI of 1.6% over the last three months and wage growth at around 4%. He emphasized that supply-side investments in factories and AI-driven productivity could allow for strong economic expansion without necessitating higher interest rates from the Federal Reserve. Hassett's view contrasts with former Fed Vice Chair Roger Ferguson, who noted core CPI has been above 2.5% and expects two rate hikes due to persistent inflationary pressures over five years. The debate centers on whether supply-side growth can outpace demand or if current policies are creating an inflationary gap before new capacity is realized. Market expectations currently give a 60% chance of another interest rate hike, highlighting the uncertainty around future Fed policy and economic conditions.
Tickers: $GS
Topics: AI economic growth Federal Reserve inflation interest rates