“Shadow Bankers Chairman” Hassett said: The Federal Reserve should cut interest rates next week, wit

Kevin Hassett stated that the Federal Reserve should cut interest rates at its next meeting, with a potential reduction of 25 basis points. Currently, as Trump prepares to nominate the new chairman of the Federal Reserve, market attention to monetary policy has increased significantly.

On Thursday, Kevin Hassett, the “Chairman of the Shadow Fed” and director of the White House National Economic Council, said in an interview with Fox News that, based on the recent statements by Federal Reserve officials and regional central bank chairmen, they seem to be more inclined to cut rates. He emphasized his desire to achieve “lower interest rate levels over the long term,” and said that if the market reaches a consensus on a 25-basis-point reduction, he would accept it.

Earlier this week, Trump announced that he plans to announce the candidate for the position of Federal Reserve chairman by early 2026, and the final candidate has been identified. He has publicly praised Hassett several times recently, and hinted during White House events that Hassett might be nominated. If the nomination proceeds, Trump’s allies are discussing the possibility of having Hassett serve in a concurrent role alongside Treasury Secretary Sebastian.

However, Deutsche Bank believes that even if Hassett takes office, there will still be many obstacles to implementing rate cuts. By mid-2026, the economic fundamentals of the U.S. economy may not support significant rate cuts. Additionally, resistance from within the Federal Reserve’s hawkish faction could make it difficult to implement aggressive easing measures.

Long-term easing goals must be compromised with short-term realities.

In his interview, Hassett clearly expressed his long-term desire for lower interest rates, but also showed a pragmatic approach. He said that if the Federal Open Market Committee reaches a consensus on a 25-basis-point reduction, he would be willing to accept that amount.

When asked about the number of additional interest rate cuts he would pursue if nominated, Haselet avoided providing a specific number. He emphasized that the role of the Federal Reserve chairman involves being “highly sensitive to data,” and it is necessary to consider the impact of interest rate adjustments on inflation and employment. This stance indicates his attempt to find a balance between policy priorities and the central bank’s independence.

The nomination process is accelerating

. Trump has recently indicated that Haselet could be nominated. During a White House event on Tuesday, Trump said, “I think there’s another potential candidate for the Fed chair. I don’t know who it is yet… But he’s a respected person, and I can tell you that. Thank you, Kevin.”

Haselet himself is cautious about the nomination, saying, “The president is considering several candidates. It would be an honor if someone outstanding could be included on this list. We’ll see what happens.” Trump has stated that he will announce the final nominee by early 2026.

Marketers expect challenges ahead

. Deutsche Bank warns of optimism regarding a “pessimistic shift” in monetary policy. The bank notes that by mid-2026, the economic fundamentals of the U.S. may not support significant interest rate cuts. Additionally, hawkish members of the Federal Reserve Board will also pose obstacles.

Investors should be wary of overpricing aggressive monetary easing policies. Deutsche Bank believes that the actual policy path will likely be more moderate and neutral than market expectations. Even if Haselet is confirmed as the nominee, his implementation of policies will be constrained by various real-world factors.