Hassett: Appointing Waller is "the right person at the right time," and the Federal Reserve's balance sheet should be "as streamlined as possible."

Trump's economic advisor Hassett calls for the Federal Reserve to reduce its balance sheet to the "most streamlined" level possible and supports Trump's nomination of Waller as Fed Chair, stating that "the right person was chosen at the right time."

Hassett stated on Fox News' Sunday Briefing that the Federal Reserve should focus on its core responsibilities—maintaining financial stability, lowering interest rates, reducing unemployment, and decreasing inflation. He emphasized that the Fed should carry out its duties "in an old-fashioned, quiet manner."

The senior White House economic advisor also warned that if data changes significantly and inflation suddenly rises, there will be no room for interest rates to drop to as low as 1%. Hassett revealed that Trump believes the U.S. is currently experiencing positive supply shocks.

Hassett himself was previously one of the candidates for Fed Chair. He stated that Trump will outline the housing and affordability agenda in the State of the Union address.

Strong Support for Waller's Nomination

Hassett expressed strong support for Trump's nomination of Waller as Fed Chair. He described Waller as a "data-driven, independent" candidate, implying that this nominee will formulate monetary policy with an objective attitude rather than being influenced by political factors.

This statement is significant for alleviating market concerns about the independence of the Federal Reserve. Waller served as a Fed governor from 2006 to 2011 and was involved in formulating key policies during the financial crisis.

Position on Balance Sheet Reduction

Hassett clearly stated that the Federal Reserve should compress the size of its balance sheet to the "most streamlined" level possible. This statement echoes the Trump administration's expectations for the normalization of Fed policy.

He emphasized that the Fed should return to traditional monetary policy operations, focusing on its statutory responsibilities with a low-key and pragmatic attitude. This suggests that the White House hopes the Fed will reduce the massive asset holdings left over from the era of quantitative easing.

Caution on Interest Rate Outlook

Hassett issued a cautious signal regarding future interest rate trends. He pointed out that if economic data changes significantly and inflation suddenly rises, there will be no room for interest rates to drop to ultra-low levels like 1%.

This statement indicates that the White House economic team remains vigilant about inflation risks while also cooling market expectations for significant rate cuts. Hassett mentioned that Trump believes the U.S. is experiencing positive supply shocks, which may suggest that the government expects supply-side reforms to help drive economic growth without triggering inflation