Donald Trump‘s potential nominee for the Federal Reserve, Kevin Hassett, has defended the central bank’s recent interest rate reduction, despite Trump’s criticism.
What Happened: Hassett, a former Trump economic adviser, justified the half-point rate cut citing a weakening jobs market, Financial Times reported on Friday.
In an interview with the FT’s Unhedged newsletter, Hassett stated, “The latest move to start reducing rates is something that made a great deal of sense based on the data that they had at the time.”
This stance contrasts with Trump’s remarks at the Detroit Economic Club, where he labeled the rate cut as a political maneuver.
Trump criticized the Federal Reserve for lowering rates to benefit his Democratic opponent, Kamala Harris. Despite agreeing with Trump that the Fed has acted politically in the past, Hassett dismissed concerns about undermining the Fed’s independence if Trump returns to power. He emphasized that Trump supports central bank independence but wants his voice heard.
The Fed, which plans smaller rate cuts in the coming months, has consistently denied setting monetary policy based on political considerations. Hassett, currently at Stanford’s Hoover Institution, remains a key figure in Trump’s circle and could lead the Fed if Trump wins the upcoming election.
Why It Matters: The Federal Reserve’s decision to cut interest rates by 0.5% has sparked significant market reactions. This move marked the first rate cut since March 2020, bringing the target fed funds rate to a range between 4.75% and 5%. The rate cut has led to a surge in the S&P 500 and gold prices, while small-cap stocks have also rallied.
Price Action: On Friday’s pre-market, as per Benzinga Pro, SPDR S&P 500 ETF Trust SPY which tracks the S&P 500 was trading 0.25% higher while Invesco QQQ Trust, Series 1 QQQ was trading 0.61% higher.
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Illustration created using artificial intelligence via MidJourney.
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
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