Kevin Hassett is signaling he’s ready to shake up the Federal Reserve.
In an interview with FOX Business’ Larry Kudlow on Tuesday, the National Economic Council director – and Fed chair frontrunner – openly hinted he would overhaul key parts of the Federal Reserve and scrutinize everything from the Fed’s research divisions to its regional presidents.
“The point is the Fed should be focused on monetary policy and to try to stay out of politics,” Hassett said.
“And think about how many times in the last couple of years, or even just this year, you’ve seen Fed people, from regional presidents all the way up to people at the top, go on and on and on about tariffs and even falsely asserting that tariffs could be inflationary … and to make it your main talking point every time you give an economic speech is to do the opposite of what Alan Greenspan advised us to do.”
AMERICANS WILL LOOK AT THEIR WALLETS AND SEE TRUMP IS ‘GOOD’ FOR THE ECONOMY: KEVIN HASSETT
“I think that the Fed needs to go back to being a nonpartisan organization that focuses on bank regulation and on monetary policy and tries to stay out of politics,” he emphasized.
Over the past few weeks, Hassett has emerged as President Donald Trump’s favorite to replace Jerome Powell as Fed chair. The top White House economic advisor then said on “Fox & Friends Weekend” earlier this month he would be “happy to serve” if selected as the next chairman.
Hassett has previously commented on and criticized Powell’s leadership, largely arguing that the central bank has made policy errors and needs to turn the page to a more independent and data-driven approach.
His remarks on Tuesday come at the same time the Federal Reserve is meeting to make its next rate decision, which it will announce on Wednesday. Hassett noted there’s “for sure” more room for rate cuts now and in the future.
“The reason is that we’ve got a big, big increase right now in aggregate supply. And what causes inflation is when aggregate demand runs ahead of aggregate supply,” Hassett explained. “But because of the AI productivity shock, because of the 18 trillion [dollars] in new factories that are coming on board and the expensing, all of that increases aggregate supply, which puts downward pressure on prices.”
In addition to returning to a stricter policy focus, Hassett mentioned he would also evaluate or cut economists and research divisions, as well as replace Fed members as necessary.
“Are they doing a good job at forecasting how the economy’s gonna be over the next 12 months? Do they have a lot of people dedicated to that? And are they doing a good job or not? You know, if there are people that are just fantastic at nailing the economy, and it took 400 of them, then maybe you keep 400,” he posited. “But I think that if you go back and look at the research papers that are being written, there are a lot of things that are not central to monetary policy.”
“Any new Fed chair is gonna have to investigate and think about who’s doing a good job and who’s not doing a good job,” Hassett continued. “The American people and the president expect the next Fed chair to hold people accountable, to make people, help people be more effective and to be nonpartisan … So there are a lot of things that need to be addressed and either fixed with new people or fixed with new ideas about how to run things.”
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