Hassett Backs Incoming Fed Chair Warsh's Focus on Monetary Policy, Downplays Inflation Risks From Oil Shock

Kevin Hassett endorsed Kevin Warsh and framed the Federal Reserve as having lost focus on its mission. He argued that the Fed should restore independence by returning to its roots, implying a narrower mandate and tighter signaling similar to the Greenspan era. Hassett addressed rising energy prices by saying that a short-term oil shock should not change long-run policy and that the Fed should keep its eye on the horizon. He pointed to core PCE remaining in a relatively stable range, using core inflation as the best guide to future headline inflation. He also attributed disinflation to wages, capital expenditures, AI productivity, and deregulation.

"“I just agreed with everything that he said. The idea that the FED has lost its way a little bit, that it's sort of lost track of its mission. It's doing DEI stuff and climate change and all that kind of stuff... he wants to restore FED independence by returning to its roots.”"

"“Well, you know, I think that as an abstract principle, if inflation blips up because of a short term oil shock, then that shouldn't affect long run policy. The FED should keep its eye on the horizon.”"

"“The best forecast of top line inflation in the future is core today. And the core has barely moved just a little bit.”"

Read at 24/7 Wall St.