Kevin Hassett, a White House economic advisor and prospective candidate to lead the Federal Reserve, expressed in a recent interview his vision for the Federal Reserve's next chairperson. Speaking to CNBC on Thursday, Hassett emphasized the necessity for the Fed's leader to be an independent individual committed to respecting the central bank’s dual mandates.
Highlighting historical precedent, Hassett referred to former Chair Alan Greenspan, praising his approach during years of robust economic activity. He noted that Greenspan effectively allowed the economy to expand significantly without sparking inflation, as Greenspan understood the underlying causes of the economic heat. Hassett’s comments resonated with President Donald Trump’s earlier statements this week regarding the Fed chair role.
Addressing current economic conditions, Hassett indicated optimism about sustained growth, suggesting the United States might experience two quarters of GDP growth exceeding 5%. He specifically pointed out that inflation has remained subdued despite this expansion, attributing the phenomenon to heightened productivity driven by advancements such as artificial intelligence and the expansion of data centers. Drawing a comparison to the economic climate of the 1990s, Hassett proposed that a leadership style akin to Greenspan’s would be well-suited for today's economy.
In a separate development, President Trump disclosed on Wednesday that he is nearing a decision on the next Federal Reserve chair. He expressed support for Hassett remaining in his current advisory role but also mentioned Rick Rieder, BlackRock’s chief bond investment officer, as a strong candidate following an impressive interview. Hassett himself spoke positively about Rieder during the CNBC discussion, noting his long-standing acquaintance and referring to him as an expert in bond markets.