Hassett says Trump is right where others are wrong about inflation
- - Hassett says Trump is right where others are wrong about inflation
By Michael S. Derby December 19, 2025 at 10:28 PM
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By Michael S. Derby
Dec 19 (Reuters) - White House economic advisor Kevin Hassett, who is on a shortlist to potentially become Federal Reserve leader, said on Fox Business Friday that President Donald Trump is right when he says inflation is low, even as the data, public opinion and most economists stand at odds with this view.
Hassett said that the widespread practice of evaluating inflation on a year-over-year basis is off base and it’s better to look at price pressures on a three-month moving average. That means that instead of price pressures outstripping the Fed’s 2% target by a lot, they’re actually below target, Hassett said, adding “that's the way the president is thinking about it, too.”
On Thursday, the government reported that in November, the Consumer Price Index, a key inflation barometer, rose 2.7% versus a year ago, down from the 3% reported in September. The report was delayed due to the government shutdown.
While the CPI moderated in November, it nevertheless remained well above the Fed's 2% target, and many Fed officials continue to worry that price pressures are still too high and some even are opposed to cutting rates given the persistence of elevated price pressures and concerns over how much Trump's tariff regime may drive price increases.
Trump has been pushing aggressively for interest rate cuts even as that type of policy is likely to exacerbate high price pressures. The president, who is facing very low polls on his handling of economic issues, has instead argued that inflation is a fading concern, saying on Wednesday that "I am bringing those high prices down and bringing them down very fast."
Hassett explained that by looking at price pressures on a three-month average, inflation is now around a 1.6% rate.
Trump's economic advisor, who is one of a small group of possible successors to Fed Chair Jerome Powell when his term ends in May, also took issue with the inflation analysis of New York Fed President John Williams, who said in a CNBC interview on Friday that technical issues with the compilation of the CPI data may have made it look a little better than it actually is.
With the Fed having cut its interest rate target by a quarter percentage point to between 3.5% and 3.75% last week, Williams added he doesn't "have a sense of urgency to need to act further on monetary policy right now, because I think the cuts we've made have positioned us really well."
Hassett responded that "John is a serious guy. He understands there's technical difficulties in the numbers because there are some things that they didn't survey" due to shutdown disruptions. "But when he gets his people to go back and tell him what the error bands are, then he's going to see that this is great news...This means the Fed has plenty of room to cut."
(Reporting by Michael S. Derby, Editing by Franklin Paul and Andrea Ricci)
Source: “AOL Breaking”
