White House National Economic Council Director Kevin Hassett says he has full confidence in Federal Reserve Chairman Kevin Warsh after the central bank decided to keep rates unchanged. Speaking on "Bloomberg Open Interest," Hassett also weighs in on current inflation levels and says he doesn't see markets in bubble territory because of AI.
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What Kevin Hassett said
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Kevin Hassett, Director of the National Economic Council, expressed full confidence in Federal Reserve Chair Kevin Warsh despite three dissents from regional Fed presidents, noting Warsh's house is in order and the latest PCE data eased pressure. He defended the Fed's new approach, citing a brain trust including Karen Dynan to develop a better reaction function than the old Phillips curve-based model. Hassett dismissed market concerns about long-term yields, arguing final sales grew 3.9%, indicating a strong economy. He called Warsh a realist committed to the 2% inflation target, blaming past inflation on Biden-era stimulus. He asserted the Fed's previous moves were politically suspicious, but Warsh will ensure independence. He downplayed tariff and energy inflation, citing falling drug and egg prices. On AI, he saw no bubble, noting AI companies generate real revenues unlike dot-com era firms.
Key takeaways
Hassett reaffirmed full confidence in Fed Chair Kevin Warsh despite three dissents.
Final sales grew almost 4%, signaling a strong economy despite weak GDP headline.
The Fed's old reaction function was based on outmoded Phillips curve science.
5:25... that it's a difficult task because this is a Federal Reserve who is political Director Hassett who is political at the Fed would you view the three dissents as we saw in favor of a hike were those political votes by those FOMC members?
7:42... who acknowledge the fact that the inflation level is higher than the Fed's target and are worried that those two inflationary issues could make inflation more troublesome, more nettlesome or even go higher here in the months ahead?
8:57Why isn't that what we heard from Chair Warsh?
9:26And as you look at the AI sectors we've been doing over the course of the morning, are there warning signs that you see that we could be in bubble territory here?
Welcome to our global TV and radio audiences. I'm Danny Berer alongside David Gura. Data showing the US economy grew at a weaker than expected pace while the Fed's preferred inflation gauge cooled in June. Let's bring in White House National Economic Council Director Kevin Hassett. Kevin, we can talk about the state of this economy in just a moment, but I want to begin with what you discussed yesterday. Yesterday before this Fed decision saying that you have full confidence in Chair Kevin Warsh. Now it is a market that has rethought that is losing confidence with long-term yields pushing at their highest in more than two decades and at the same time economists giving counsel that they don't think that they are fully confident in this Fed either. Director Hassett, do you still have full confidence in Fed Chair Warsh?
Of course. Of course. And there's a natural transition time where a new leader comes in and tries to get the house in order. I think that you know that there were three dissents but you know that happened to Jay Powell in the past as well. The dissents all came from regional Fed presidents not from the actual governors and so it sounds like he's got his house in Washington in order. And we'll look forward to seeing how it's going forward. But I think that his job just got a little bit easier if you looked at the PCE data that just came out which was actually a top line of negative which is very unusual. Core dropped a lot and so I think the inflation numbers have continued to head in the direction that we saw with the previous CPI number which is you know an objective of the Fed is to get those numbers down.
And we heard from him after the last CPI report not to look at one set of data discreetly. But picking up on what Danny was asking about just a moment ago there does seem to be some concern here that there is no clear reaction function at this time. No clear analytical framework from this Fed. Is that a concern to you? Is it something that you think that the Fed Chair has to work to remedy here in meetings ahead?
Well, again, I think that the Fed's old political reaction function was based on outmoded science regarding the Phillips curve and if you get a little bit of growth, then you got to hike rates. But that, you know, that model assumes that the growth is coming from demand side factors. And I think what Kevin Warsh has done is he's brought in a brain trust of some of the smartest people on earth to help rethink what's you know given all the science we've had on what happens when there's supply versus demand shocks. What should the Fed be doing? And it's a lot different than what the Fed staff has been advising people to do over the last few years. And so I would say we're going to have a new improved and much better reaction function. And that's happening relatively quickly because Kevin's putting some of the smartest people have been working on this their whole career like Karen Dynan at Harvard to help him think about how to do that.
He might have his house in order as you say Director Hassett but again it's a market that is not in order. It is a long-end yield the 30-year yield which yesterday closed at its highest since 2007 at 5.20. Are you concerned that this is a Fed Chair that does not have control of these markets? Because Director Hassett, that makes your life much harder. It makes this economy and consumers who want to buy a house, it makes their life much harder. And you as you look to at the cost of servicing debt.
Look, the bottom line is that Kevin Warsh was there before. He's an incredibly experienced guy. He's well respected and well liked by his colleagues, even the Democrats up on the board. And he'll do what the data say he should do and he'll be independent. And the fact is that the data right now are taking the pressure off the Fed. And I think that the markets will get around to seeing that. Maybe they need another couple of prints like the one we saw today from PCE. But we should also talk about the GDP numbers today a little bit because I think that they've been miscovered quite a bit. The fact is that final sales were up almost 4%. We had a big boom in consumption, a big boom in investment. We even had big positive housing numbers and those were offset in the bottom line because the capital spending that we're doing is imported capital goods which so you subtract imports from that and then also because of a technical changes in the price of oil they revalued the oil inventories that subtracted from GDP as well. So I think that the final sales number of 3.9 is really what I would say is the signal. So it's not a half full glass of GDP, it's a full glass.
Full glass of GDP. I want to pick up on something you said. You've known Kevin Warsh for an awful long time through Republican policy circles and certainly your time at AEI and I'm curious. I think an open question here is is Kevin Warsh a hawk or a dove. What would your answer to that question be?
I think he's a realist but he's really serious about getting inflation back to its target. That's his job. He's a very very pragmatic person who understands the responsibility of the Fed is a dual mandate and the part of the mandate that's been out of control recently is inflation and most of that was not the Fed's fault. Most of that happened or at least not directly because remember what happened was that right after Joe Biden took office we had this massive stimulus even though the COVID episode had mostly ended and that massive stimulus was like a helicopter drop of cash into the economy. The thing is that the Fed was in denial that that would cause inflation for almost a year and that's how inflation got out of control but the stimulus that actually caused the inflation was the reckless spending by Joe Biden and you know I can promise you that this administration is not going to do anything.
I mean again Director Hassett I would point out that we've had a lot of stimulus from this administration as well be it COVID checks themselves or what we've seen in the one big beautiful bill even so it is a president who yesterday echoed what you're saying his confidence in Chair Hassett but at the same time said that it's a difficult task because this is a Federal Reserve who is political Director Hassett who is political at the Fed would you view the three dissents as we saw in favor of a hike were those political votes by those FOMC members?
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Hassett, K. (2026, July 30). White House NEC Director Kevin Hassett Talks Fed Chairman Warsh, Market | Bloomberg Talks [Interview transcript]. Bloomberg Podcasts. CEOInterviews.AI. https://ceointerviews.ai/interview/1243150/
MLA
Kevin Hassett. "White House NEC Director Kevin Hassett Talks Fed Chairman Warsh, Market | Bloomberg Talks." Bloomberg Podcasts, 30 Jul. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/1243150/.
BibTeX
@misc{hassett2026_1243150,
author = {Kevin Hassett},
title = {White House NEC Director Kevin Hassett Talks Fed Chairman Warsh, Market | Bloomberg Talks},
howpublished = {Interview transcript, Bloomberg Podcasts. CEOInterviews.AI},
year = {2026},
month = {jul},
url = {https://ceointerviews.ai/interview/1243150/},
note = {Speaker-attributed transcript with timestamps}
}
