Potential Fed Chair Says U.S. Is Late Cutting Rates as Economy Speeds Up

A leading contender to become the next chair of the Federal Reserve says the U.S. is moving too slowly when it comes to lowering interest rates.

National Economic Council Director Kevin Hassett told CNBC that the Fed is “way behind the curve” compared with other central banks, despite strong economic growth and signs that inflation pressure is easing.

Hassett is widely viewed as a top candidate to replace Jerome Powell, whose term as Fed chair ends in May.

Strong Growth, Slower Rate Cuts

The comments come after new data showed the U.S. economy growing at a 4.3% annual pace in the third quarter, far above the 3.2% forecast from economists surveyed by Dow Jones.

Hassett argued that growth is being fueled in part by rapid advances in artificial intelligence, which he says are lifting productivity while also helping to keep inflation in check.

“If you look at central banks around the world, the U.S. is way behind the curve in terms of lowering rates,” Hassett said during CNBC’s Money Movers segment.

Tariffs and the Trade Deficit

Hassett also credited tariffs implemented under Donald Trump for improving the trade balance. He said about 1.5 percentage points of third-quarter growth came from a smaller trade deficit, which he linked to tariff policy.

That view aligns with the broader argument from the administration that trade measures have supported domestic production and economic momentum.

Fed Signals Caution Going Forward

Earlier this month, the Fed cut its benchmark interest rate by a quarter point, marking the third reduction in 2025. However, policymakers signaled that future cuts could come more slowly.

The December decision was unusually divided, with three Fed governors voting against the cut, the most dissent since 2019. Powell later described the move as a “close call,” highlighting growing debate inside the central bank.

Trump has repeatedly criticized the Fed for not cutting rates faster. He recently said he will announce his Fed chair nominee soon and stressed that he wants someone who supports “much lower” interest rates.

Independence Questions Remain

Hassett has pushed back on concerns that he would be too close to the White House if nominated, telling CNBC that the Fed’s independence is “really important.”

As markets look ahead to 2026, the direction of interest rates and who leads the Federal Reserve could play a major role in shaping borrowing costs, housing demand, and overall economic confidence. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.