National Economic Council Director Kevin Hassett said Tuesday that the Federal Reserve (Fed) is moving too slowly in cutting interest rates, despite evidence that the U.S. economy is growing much faster than expected. Speaking to CNBC, Hassett argued that the artificial intelligence boom is supporting stronger economic growth while also helping to restrain inflation, creating room for more aggressive rate reductions. He added that compared with other major central banks, the Federal Reserve is “behind the curve” when it comes to easing policy.

Hassett’s comments came alongside the release of delayed third-quarter Gross Domestic Product (GDP) data showing the U.S. economy expanded at a 4.3% annualized pace, well above economists’ expectations. He attributed roughly 1.5 percentage points of that growth to President Donald Trump’s tariff policies, which he said helped narrow the U.S. trade deficit. The strong growth reading contrasted with the Fed’s cautious stance, even as it delivered its third rate cut of the year earlier this month, lowering rates by a quarter point while signaling a slower pace of easing ahead.

The debate over rate policy is drawing added attention because Hassett is viewed as a leading contender to succeed Federal Reserve Chair Jerome Powell when his term ends in May. The Fed’s most recent decision saw three dissenting votes, the first time that has happened since 2019, and Powell described the cut as a “close call.” While Trump has repeatedly criticized the Fed for not cutting rates faster, Hassett has sought to distance himself from those attacks, saying recently that the central bank’s independence remains “really important.”

Key Hassett highlights

GDP figure a great Christmas present for American people.
AI productivity boom evident in US economic data.
We'll see a return to 100k to 150k monthly job gains if GDP growth stays in 4% range.
Consumer sentiment is pretty uncorrelated with hard economic numbers.
When people are optimistic, that makes them more willing to spend.
Fed is way behind curve on rate cuts.
Trump has lots of housing affordability plan options. He'll announce housing plan sometime in new year.