White House Advisor Kevin Hassett Says Fed Has “Plenty of Room” to Cut Rates

WASHINGTON, D. C. - According to Kevin Hassett, an economic adviser at the White House, the Federal Reserve could reduce interest rates by a large margin this year, and this shows that there are hopes for the US economy to experience a soft landing from reducing inflation and continuing growth.

Hassett said in an interview today that although the U. S. economy is still strong, it may be necessary to reduce interest rates in order to prevent an economic slowdown. He stated that the current policy rate, which lies between 5. 25% and 5. 50%, is “too tight” and gives the Fed room to inject growth with ease through interest rate cuts if required.

Fed Poised for Easing Cycle in 2026

This is because most market players anticipate a cut in key policy rates by the Federal Reserve in the near future. With inflation now well below its 2022 peak levels and unemployment staying under 4%, there is confidence that the economy may decelerate without falling into a recession.

“The Fed can afford to take its foot off the gas,” Hassett said, implying that some minor cuts may be needed for sustaining consumer demand and avoiding an unwarranted economic slowdown. “We’re not talking about going back to zero rates, but there’s room to normalize as inflation gets back to target.”

Investors have been on high alert over what move the Fed will make next after recent hints from Chair Jerome Powell that a gradual rate cut could be on the cards should inflation continue trending downwards.

Market Reaction and Economic Outlook

After Hassett’s remarks, there was a slight increase in U. S. stock futures prices while bond yields fell marginally, indicating renewed hopes of monetary policy easing. Analysts believe that this statement strengthens the emerging view that, depending on certain economic indicators such as inflation data and employment trends, the Fed might announce its initial rate cut by June 2026.

Economic strategists think that even a marginal decrease in interest rates would ease pressure on housing, consumer lending, and the corporate borrowing sector. “A few well-timed cuts could spark business investment and stabilize credit markets,” said one Wall Street economist.

Political and Policy Implications

The statement made by Hassett also reveals how keenly the White House has been working with economic policymakers so as to ensure growth continues before the election period sets in. Although the Federal Reserve acts independently, political analysts see in the government’s communication a sign of comfort with monetary easing that does not put at risk a return of inflation.

As inflation moves closer towards the Fed’s target of 2%, it is agreed by analysts that policymakers can now focus on supporting job creation, enhancing consumer sentiment and maintaining a stable economic growth.