Trump Fed chair frontrunner Kevin Hassett hints at comprehensive Federal Reserve overhaul

Core Viewpoint - Kevin Hassett, the National Economic Council director and a frontrunner for the Federal Reserve chair, is advocating for a significant overhaul of the Federal Reserve, emphasizing a return to a nonpartisan focus on monetary policy and bank regulation, while distancing the institution from political influences [1][2][4]. Group 1: Proposed Changes to the Federal Reserve - Hassett suggests that the Federal Reserve should concentrate on monetary policy and avoid political discussions, criticizing recent Fed officials for their comments on tariffs and inflation [2][6]. - He plans to evaluate the effectiveness of the Fed's economists and research divisions, proposing potential cuts or replacements if necessary [6][7]. - Hassett believes that the Fed's current leadership has made policy errors and advocates for a more independent, data-driven approach to monetary policy [4][6]. Group 2: Economic Context and Implications - As the Federal Reserve prepares for its next rate decision, Hassett indicates that there is significant room for rate cuts due to an increase in aggregate supply, which he attributes to advancements in AI and new factory investments totaling $18 trillion [5][6]. - He argues that inflation occurs when aggregate demand exceeds aggregate supply, and the current economic conditions are conducive to downward pressure on prices [6][7].