"Defending Trump by calling a deer a horse?" The "New Federal Reserve News Agency" criticizes the hot candidate for Federal Reserve Chair, Hassett

Nick Timiraos, a senior Federal Reserve reporter known as the "New Federal Reserve Correspondent," criticized U.S. President Trump's chief economic advisor Kevin Hassett on social media platform X on Friday for recently defending Trump's questioning of the Federal Reserve's independence. Timiraos pointed out that Hassett, the Director of the White House National Economic Council, defended the independence of the Federal Reserve as "undoubtedly important" during a recent media interview, while simultaneously justifying Trump's actions in questioning the Federal Reserve's independence, suggesting that the partisan bias lies with the Federal Reserve. Some of his accusations even contradicted his previous statements. Timiraos believes that given Hassett is a leading candidate for the next Federal Reserve Chair, his accusations against the Federal Reserve are quite inappropriate. Timiraos questioned in a tweet: "What is the evidence for this accusation?" This controversy once again highlights the complex positions within the Trump administration regarding the sensitive topic of Federal Reserve independence and reflects the market's concern about the future direction of monetary policy. Questioning the Federal Reserve's Performance During Inflation According to Timiraos, Hassett's first accusation during the interview was that the Federal Reserve's misjudgment of inflation predictions in 2021 proved its partisan bias. Hassett stated in the interview: "(The Federal Reserve's) governors have been acting in a partisan manner— for example, they have allowed inflation under the Biden administration to spiral completely out of control..." However, Timiraos pointed out a "noteworthy detail": during Biden's presidency, five of the six Federal Reserve governors were appointed during Trump's first term, including current Federal Reserve Chair Jerome Powell, former Vice Chair Richard Clarida, former Vice Chair for Supervision Randal Quarles, current governor Christopher Waller, and Vice Chair for Supervision Michelle Bowman. Timiraos indicated that Hassett might be familiar with this, as the first four were nominated while Hassett served as Chair of the Council of Economic Advisers. During this period, only one governor—Lael Brainard—was appointed during the Obama administration. Timiraos also noted that once the Federal Reserve realized its monetary policy stance was significantly off track, it began to raise interest rates sharply. The governors appointed by Biden started filling board positions in the second quarter of 2022, with Lisa Cook and Philip Jefferson serving as governors before the Federal Reserve's first 75 basis point rate hike in June 2022, and former Vice Chair for Supervision Barr also participated in the vote supporting the subsequent three rate hikes of 75 basis points each in July 2022. Controversy Over the Timing of Policy Tightening Hassett's second accusation was that the Federal Reserve only began to tighten monetary policy after Biden nominated Powell to continue as Chair. Powell's reappointment was announced on November 22, 2021, after Biden informed Powell of this decision on November 19 In response, Timiraos rebutted that while there is indeed debate over the definition of tightening monetary policy, the Federal Reserve announced earlier that month, on November 3, 2021, that it would begin to reduce bond purchases, known as tapering. The next day, Biden met with Powell and Brainard. This indicates that the timing of the withdrawal of accommodative policies was more simultaneous than sequential. Motivation for Pre-Election Rate Cuts Questioned Hassett's recent third accusation against the Federal Reserve is that it unexpectedly cut interest rates before last year's election to help boost the chances of Democratic presidential candidate Harris winning. However, Timiraos found that Hassett did not express this view last year. In fact, he defended the decision in a media interview a year ago, stating that the rate cut was "a very wise decision based on the data they had at the time." Public reports show that Hassett said in an interview in October 2024: "History books will call it a mistake, but I think when you grade economic policymakers, you need to understand the context in which they made their decisions. For me, I wouldn't give them a low grade for the actions in September, even though in hindsight, they might wish they hadn't done that."