Hassett: Oil prices will plummet once the US and Iran reach an agreement, creating room for the Federal Reserve to cut interest rates.

According to ME News, on May 25 (UTC+8), Kevin Hassett, US President Trump's chief economic advisor, stated that he believes the eventual drop in oil prices will create room for the Federal Reserve to cut interest rates. "We again expect that once an agreement is reached, energy prices will plummet," Hassett said. "When that happens, the Fed will have ample room to take the right action and lower interest rates." He emphasized his respect for the Fed's independence and praised Kevin Warsh, who was sworn in as Fed chairman last Friday. While the surge in US fuel prices caused by Iran's closure of the Strait of Hormuz poses a growing political risk to Trump and his Republicans in the November midterm elections, Hassett believes that accelerating inflation is primarily driven by energy prices. "If you look at the recent data reports, energy prices are absolutely worrying, but core prices have hardly changed," he said. "I think once we see energy prices fall, you might actually see negative inflation because of the drop in energy prices." (Source: ME)