Kevin Hassett Backs Fed’s 25bps Rate Cut—But White House Wanted More Aggressive Action

Fed opts for cautious 25 basis point cut while administration pushes for bigger stimulus—classic case of central bank caution versus political pressure.

Policy Divergence Emerges

Hassett's support for the measured cut contrasts sharply with White House demands for more substantial easing. The 25bps move signals continued Fed independence amid mounting economic uncertainty.

Market Implications

While traditional markets digest the quarter-point reduction, crypto traders see opportunity—because when fiat monetary policy gets complicated, digital assets often simplify the equation. Another reminder that sometimes the most innovative finance happens outside the system.

White House wanted a bigger cut, but settled for less

Despite that disagreement inside Trump’s economic team, Kevin kept things diplomatic. “The bottom line is that moving kind of slow and steady and heading towards a target, watch the data come in, that’s what prudent policy is,” he said. Miran wanted 50, yes, but Kevin said 25 had wide support and called it “a good first step in the right direction to much lower rates.”

As for TRUMP himself? No reaction yet. He hasn’t said a word about the Fed’s decision. But it’s no secret he’s had issues with Powell. Trump has spent years dragging the Fed chair, once mocking him with the nickname “Too Late” and demanding deep, fast rate cuts. He even claimed the federal funds rate should be 300 basis points lower, which is nowhere close to what the Fed sees in its own projections released Wednesday.

Even with GDP growth running above 3% this quarter, and inflation still above 2%, Kevin backed the Fed’s decision. He said the economic data didn’t scream for lower rates, but acknowledged the broader context: the U.S. housing market is struggling, and the $37 trillion national debt doesn’t exactly make things easier.

Trump has argued that cuts are needed to ease pressure on both. The Fed didn’t give him the 50bps cut he wanted through Miran, but Kevin seemed fine with the split-the-difference outcome. “They split the baby in this decision, and I think that’s probably a pretty prudent call,” he said.

Kevin also emphasized that a wide mix of views is healthy for the Fed. “I think it’s much more prudent for the Fed to be looking at all the models, to have a diversity of opinions and decide, ‘What are we going to do in this economy that really looks to be taken off with inflation that’s decelerating, but higher than the target?’” he added.

What happens next will depend on which way the data swings. And whether Kevin actually takes Powell’s job in 2026? That’s still up in the air. But he’s already speaking like he’s got one foot in the Fed.

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