White House National Economic Council Director Hassett questions the necessity of Fed rate hikes, criticizes some officials' calls for continued tightening.

Senior White House economic official publicly questioned the necessity of the Federal Reserve's recent rate hike on Wednesday and criticized some Fed policymakers not appointed by President Trump for still advocating further monetary tightening when inflation is already relatively moderate, once again highlighting the divergence between the White House and some Fed officials over interest rate policy. White House National Economic Council Director Hassett said on Wednesday at an event at Georgetown University that with recent annualized core inflation at about 2%, he found the Fed's decision to raise rates puzzling. Hassett said: "Why are they still raising rates?" He also said that Fed Chairman Warsh is currently managing an "exceptionally partisan Federal Reserve." The Fed last week raised its benchmark interest rate by 25 basis points to 3.75%-4.00%, the first hike since 2023. Hassett said that based on his assessment of current economic data, he was concerned about the reasons behind the Fed's decision. He also took aim at former Fed Chairman Powell and Fed Governor and former Vice Chairman for Supervision Barr. Hassett noted that, according to historical convention, the Fed chair and vice chair usually leave the central bank after their leadership terms end, but this convention is not currently being followed. Powell continued to serve as a governor after his term as Fed chairman ended earlier this year. Previously, he had a public clash with the Trump administration over the issue of monetary policy independence. Barr, after stepping down last year from his role as the Fed vice chairman responsible for bank supervision, also stayed on as a Fed governor. In addition, Hassett expressed dissatisfaction with Fed officials who were not appointed by Trump. He said: "The market is also worried, because over the past few days, many officials not appointed by President Trump have been speaking out, saying we still need significant rate hikes." He then said the Fed still has a great deal of work to do in "restoring independence," and called this one of Chairman Warsh's current priorities. Meanwhile, several Fed officials have recently continued to send hawkish signals. Fed Governor Barr said on Wednesday that further rate hikes may still be needed to bring inflation back to the central bank's 2% target. Boston Fed President Susan Collins said she supports the most recent rate hike decision; St. Louis Fed President Alberto Musalem also said that further rate increases may be needed to further curb price pressures. The Fed's latest economic projections show that 16 officials expect at least one more rate hike this year. Expectations in the market that U.S. interest rates may remain high for longer have also risen noticeably recently.