Jan 30 - Kevin Hassett, a senior economic adviser at the White House, on Friday criticized the Federal Reserve for its decision not to cut interest rates this week and called for expedited Senate approval of Kevin Warsh to run the central bank.
Speaking on CNBC, Hassett also addressed legal complications surrounding the Fed that could delay any confirmation process. He singled out a contentious Justice Department investigation into concerns about the cost of a substantial renovation to a central bank building, saying that the legal question "is an issue that should get resolved quickly."
The Justice Department inquiry has created friction around the Fed's nomination process. Current Federal Reserve Chair Jerome Powell, whose term as leader concludes in May, has characterized the unprecedented legal actions as de facto punishment for the central bank not following White House directives. Senator Thom Tillis, a leading Republican, has publicly stated he will not advance any Fed nominees until the matter is settled.
Hassett stressed the White House's strong backing for Warsh. "The White House is highly, highly confident that Kevin Warsh is a great nominee and that he should be confirmed as soon as possible, and every single resource we have at our disposal is behind him and behind that outcome," he said during the interview.
Hassett, who himself was on a short list for the Fed chair position, said he was not troubled by being passed over. He declined to expound on Warsh's policy positions, saying the nominee can explain his views directly.
Responding to market reactions after Warsh's naming, Hassett downplayed investor moves and offered his broader perspective on government debt and interest rates. He said one reason interest rates should be falling across durations is that the year-over-year fiscal deficit has been reduced.
On currency, Hassett noted recent dollar softness but argued there are still numerous economic reasons to prefer a strong dollar.
Context and market notes
Hassett's remarks tied three connected threads: a critique of the Fed's policy decision this week, a push for a rapid confirmation of Warsh, and concern that a pending Justice Department investigation could delay nominations. He framed lower interest rates as appropriate given fiscal trends and reiterated support for a robust dollar despite short-term weakness.
Hassett did not elaborate on Warsh's specific policy prescriptions and emphasized that any such explanations should come from the nominee himself.