On December 24, Kevin Hassett, director of the White House National Economic Council and considered a leading candidate for the next Federal Reserve chairman, publicly criticized the Fed's pace of interest rate cuts, stating that the US has "significantly fallen behind global central banks" in this round of easing. Even though the US third-quarter GDP annualized growth rate reached 4.3%, significantly exceeding market expectations, Hassett still believes that monetary policy has failed to respond promptly to structural changes. He pointed out that the wave of investment in artificial intelligence is boosting productivity while simultaneously exerting downward pressure on inflation in the medium term, thus reducing the justification for maintaining excessively high real interest rates. He also emphasized that, looking at major central banks globally, the US's hesitation in policy shifting has gradually led to relative tightening. Although the Fed has cut interest rates three times this year and again by 25 basis points in December, it saw the most dissenting votes since 2019, indicating a significant widening of decision-making disagreements.
On the political front, Trump's continued pressure for faster and larger interest rate cuts, coupled with the impending announcement of a new Federal Reserve Chair nominee, has made the independence and direction of monetary policy a major focus of market attention. While Hassett emphasized respect for central bank independence, her stance clearly indicates a preference for growth-oriented policy thinking.
Bitunix Analyst:
From an overall economic structure perspective, the US is in a critical transitional period where "data remains strong, but trends have shifted." AI-driven investment and productivity gains are rewriting the traditional relationship between inflation and economic growth, while high interest rates continue to put pressure on low- and middle-income groups and small and medium-sized enterprises. The real risk of current policy is not premature easing, but rather choosing to wait and see when structural inflation is already showing signs of slowing, ultimately forcing a more drastic correction in the future. This is also a key reason why the market is beginning to trade in advance for "lagging policy corrections."
