Hassett accuses Warsh of running an unusually partisan Fed
Hassett also questions last week's rate increase, the Fed's first since 2023.
Published
Hassett says Warsh manages an unusually partisan Federal Reserve, and questions the central bank's decision to raise interest rates.
The Fed lifted interest rates by a quarter point last week, its first increase since 2023.
Fed officials have largely stuck to a hawkish tone since the move. Governor Barr says more rate increases are likely needed to reach the 2% inflation goal, and that inflation risks now outweigh concerns about the labor market. Boston Fed President Susan Collins says persistent inflation and renewed conflict in the Middle East supported her vote for the increase, and that the odds have risen of inflation staying well above the Fed's 2% target. Richmond Fed President Thomas Barkin says he wants the current tightening cycle to resemble the 1990s mid-cycle adjustment rather than turn into a prolonged campaign.
Hassett's criticism of Warsh and the rate increase reads as a political shot rather than a break in the Fed's consensus. The substance of recent Fed messaging, from Barr to Musalem to Goolsbee, remains hawkish: inflation is described as sticky, further increases are seen as possible, and the bar for cuts in 2025 is high. For now, that leaves little changed.