White House economic adviser Kevin Hassett stated on Tuesday that US core inflation is tracking precisely with Federal Reserve expectations, while forecasting that oil prices will continue to decline.
The comments from the National Economic Council director offer a high-level endorsement of the disinflationary trend that has recently surprised markets to the downside.
5%—below consensus forecasts—traders have moved away from anticipating imminent rate cuts.
Hassett’s remarks come as financial markets have sharply repriced Federal Reserve policy expectations.
Following a June consumer price index reading that decelerated to 3.5%—below consensus forecasts—traders have moved away from anticipating imminent rate cuts.
The White House’s alignment with the Fed’s inflation outlook provides political cover for the central bank to maintain its cautious stance, even as market pricing has shifted.
The administration’s focus on falling energy costs highlights a key variable in the inflation equation.