Hassett: Does Iran Deal Open Room for Interest Rate Cuts?
Kevin Hassett, President Donald Trump's top economic adviser in the White House, expressed confidence that falling oil prices could eventually give the Federal Reserve room to lower interest rates. He pointed to an energy-driven monetary policy, particularly if a deal is reached with Iran.
In an interview on Fox News' "Sunday Morning Futures," Hassett said the White House had indicated energy prices would fall once a deal was reached. This statement echoed Trump's social media posts describing negotiations with Tehran as "orderly and constructive."
Hassett argued that falling energy prices would ease inflationary pressures, giving the Fed "more room" to pursue lower interest rates. He also emphasized respect for the central bank's independence, praising Kevin Warsh, who was sworn in as Fed Chair on Friday, with Trump saying he wanted Warsh to be "completely independent."
Hassett's comments came as a broadcast on US fuel prices, including the Iranian closure of the Strait of Hormuz, was seen as a growing political risk for Trump and the Republican Party ahead of the November midterm elections. According to Hassett, the current acceleration in inflation is "largely" driven by energy, while pressure on the core component has been more limited in recent data releases.
He noted that if energy prices fall again, inflation could even return to negative levels due to the weakening contribution of energy. In this context, the US Consumer Price Index (CPI) rose 3.8% in April, the fastest pace in nearly three years, while the core CPI (excluding food and energy) recorded 2.8%, the largest increase since September. (asd)*
Source: Newsmaker.id
