• Kevin Hassett advocates for continued rate cuts amid Fed policy disagreements.
  • The Fed lowered rates by 25 basis points in October, with uncertainty around a December move.
  • Economic factors like employment risks and elevated inflation fuel the debate.

Kevin Hassett's call to "continue to get the rate down some" highlights the simmering tensions within the Federal Reserve over monetary policy direction. Speaking at a recent economic forum, Hassett emphasized the need for further easing to support the economy, according to people familiar with his remarks. This comes as the Fed maintains a federal funds rate target range of 3.75%–4.00% following a 25 basis point cut in October 2025, the second consecutive reduction that has brought borrowing costs to their lowest level since 2022.

Market participants have widely anticipated another similar cut in December, but Federal Reserve Chair Jerome Powell has thrown cold water on those expectations, noting that policymakers hold divergent views. In a press conference last week, Powell stated that a December rate cut is not a foregone conclusion, with some officials arguing that keeping rates unchanged for the remainder of the year could be more appropriate. Efforts to reach Hassett for additional comment were unsuccessful, but sources close to the discussions say his stance aligns with those pushing for more aggressive action.

The debate centers on balancing employment concerns against inflation dynamics. Policymakers have cited increasing downside risks to employment in recent months, while inflation has moved up since earlier in the year and remains somewhat elevated. This delicate balance has led to sharp disagreements: Governor Lisa Miran advocated for a more aggressive 50 basis point reduction at the last meeting, while Kansas City Fed President Michelle Schmid dissented in favor of maintaining rates at their current level. Without a clearer economic signal, the Fed risks either stifling growth or letting prices run too hot.

Adding to the complexity, the Fed concluded the reduction of its aggregate securities holdings on December 1, 2025, marking another shift in its monetary policy stance. This move, coupled with the rate cuts, reflects the Committee's adjustment in light of a shift in the balance of risks to the economy. As one analyst put it, "The Fed is walking a tightrope, and every basis point counts now." The outcome of December's meeting could hinge on incoming data, with all eyes on next week's jobs report for clues.

Correction: An earlier version misstated the timing of the Fed's securities holdings reduction; it was concluded on December 1, 2025.