National Economic Council Director Kevin Hassett discusses President Donald Trump’s Federal Reserve reform plans on ‘Kudlow.’ #foxbusiness #news #usa #politics #economy #federalreserve #washington #trump #inflation #tariffs #money
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Last night we talked about the need for complete reform and cleansing and perestroika of the Federal Reserve system in connection with an important Wall Street Journal article. We interviewed Kevin Warsh Monday and tonight we interview National Economic Council director, my good friend Kevin Hassett. So that's pretty good. Both Kevins in one week. Kevin, we talked last night on the show and have talked a lot before how the Federal Reserve system in the age of Trump should go through the same downsizing, the same transformations, the same perestroika that other federal agencies have gone through. And yet there's no sign of it. And I think a new Fed chairman, whether it's you or Kevin Warsh or whoever it may be, it's incumbent on you to take a look at this because so far it's the same old models that haven't worked for 50 years with a lot of dead wood, let alone the fact that they should be cutting interest rates. The president had another Truth Social out on it today. They should be cutting rates. But even larger point than that, where's the downsizing? Where's the reforming? Where is the auditing of the Fed?
Right. Well, I think that you're right, Larry, and the bottom line is that President Trump's objective is to take all of government and make it better and make it work better for the American people. And government has gotten very big throughout Washington. And one of the places that hasn't really responded yet to the downsizing that you're talking about is the Federal Reserve. And I'm sure that whatever new leadership the president chooses for the new Federal Reserve that they're going to pay close attention to the runaway spending, to the actual losses after years and years of profits and so on. And with respect to interest rates, I think that everybody always understands that the Federal Reserve is an independent agency, but the president is allowed to speak his mind, but also you should look at the data. And so one of the things, for example, you could do is look at what the European Central Bank has done with interest rates. And over time those are highly correlated with what happens here in the US. And so they've cut rates a lot. And if you were to take the rate cuts that they had and do the normal correlation for current Fed policy, then the current Federal Reserve rate would be about three. And so the president is wondering why is it that the normal correlations seem to be breaking down right now precisely while he's president. And I think that there's been an unfortunate pattern of perhaps not independent Federal Reserve taking actions where they cut right before the previous election, hiked right after he was elected last time, and right now seem to be falling behind the curve compared to what other central banks are doing. I think that that raises the specter that they're not being nonpartisan, they're not being independent, and that's something that I'm sure the president is going to address in his next set of nominations. I mean, actually surveys have shown from Federal Election Committee that over 80% of the Fed staff donates to the Democratic Party. So there's another political point there.
On that, I really loved your point about Europe correlating with the United States. European Central Bank I believe their overnight rate is now 2%. Ours is 4.5%. And yet our inflation rates are very similar here in the states. Since January for example the CPI is 1.4% at an annual rate, something like that. So why are those interest rates differentials? Someone's going to explain that. Jay Powell never talks about that. He's too busy yapping about trade policy and tariffs and inflation stuff he knows nothing about. And it's not the Fed's remit. Kevin, here, look, the reason I want to see a thorough transformation, a thorough overhaul of the Fed, a house cleaning and a cleansing, if you will, is that they are not an all powerful central planning agency. They do not run the world. And their models are completely outdated. They've been outdated for almost 50 years for heaven's sakes. Somebody's got to come in there and change all of that.
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Hassett, K. (2025, July 11). Kevin Hassett SLAMS Federal Reserve for ‘absence of transparency' [Interview transcript]. Fox Business. CEOInterviews.AI. https://ceointerviews.ai/interview/633510/
MLA
Kevin Hassett. "Kevin Hassett SLAMS Federal Reserve for ‘absence of transparency'." Fox Business, 11 Jul. 2025. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/633510/.
BibTeX
@misc{hassett2025_633510,
author = {Kevin Hassett},
title = {Kevin Hassett SLAMS Federal Reserve for ‘absence of transparency'},
howpublished = {Interview transcript, Fox Business. CEOInterviews.AI},
year = {2025},
month = {jul},
url = {https://ceointerviews.ai/interview/633510/},
note = {Speaker-attributed transcript with timestamps}
}
