• White House economic adviser Kevin Hassett reiterated his expectation that inflation should be slowing, arguing the Federal Reserve may not need to tighten further.
  • The central bank's latest policy statement and September CPI data paint a more cautious picture, with inflation still elevated and two dissents favoring a rate hike.
  • Markets remain focused on whether upcoming inflation reports validate Hassett's optimism or confirm that price pressures are proving stickier than hoped.

Kevin Hassett, director of the White House National Economic Council, said Tuesday that inflation should be decelerating, a view that, if borne out, could reduce the case for additional Federal Reserve tightening. Speaking in an interview with CNBC (NASDAQ:VSNT), Hassett pointed to underlying trends that he believes will bring price growth down, though he acknowledged that the most recent data have been less cooperative.

The remarks come as the Fed holds its policy rate at 3.75%–4.00%, a level it has maintained since late October. In its October 28 statement, the central bank said inflation remained elevated and noted strong economic growth, resilient consumer spending, and robust capital investment—a combination that has kept policymakers wary of declaring victory over price pressures. The decision was not unanimous: two officials, Lisa Cook and Beth Hammack, dissented in favor of a quarter-percentage-point increase, underscoring that further tightening remains a live option.

Hassett's comments are not an official policy signal. He speaks for the administration, not the rate-setting Federal Open Market Committee, and his outlook has shifted before. In a July appearance, he argued that a favorable inflation report should discourage rate hikes and could even open the door to easing. By mid-October, he was striking a more nuanced tone, telling CNBC that September inflation was "back needing some work" and that the acceleration could be either a temporary blip or a break from the downward trend.

The data released since then have done little to settle the debate. September consumer prices rose 0.6% month over month, the fastest pace in five months, while core CPI excluding food and energy climbed 0.3%. Those monthly figures, while not annual rates, suggest inflation is not yet on a smooth path lower. Hassett himself has acknowledged that buoyant consumer spending is something the Fed needs to watch, even as he has described the economy as a "boom."

For investors, the stakes are conditional. If inflation convincingly slows, the argument for keeping borrowing costs restrictive for longer weakens. If price pressures persist alongside strong demand, rates could stay higher for an extended period—and the two October dissents show that some officials are prepared to act. The Fed's statement reaffirmed its commitment to returning inflation to its 2% target, without committing to a cut or a timetable.

Hassett said he respects the Fed's independence and expects Chair Kevin Warsh to do what he considers right. A spokesperson for the National Economic Council did not respond to a request for comment on the specific timing of Hassett's latest remarks.

Correction: An earlier version of this article misstated the month of Hassett's July appearance. It was July, not June.