Early Spoiler for Non-Farm Employment? Hassett: Jobs Report to Be Strong Again, Insufficient Grounds for Rate Hikes

The White House’s chief economic advisor weighed in on the Federal Reserve’s monetary policy, setting the tone for markets ahead of this week’s dense release of key data.

On Monday, Kevin Hassett, Director of the National Economic Council, stated on CNBC that based on "all the signs we are seeing so far," Thursday's jobs report is expected to show "another strong figure."

He stated that the surge in U.S. AI-driven productivity has a deflationary effect, meaning there are currently insufficient grounds for interest rate hikes.

This week, financial markets will focus closely on the upcoming U.S. labor data and inflation indicators, which investors will use to assess the Federal Reserve’s future interest rate path.

Labor Market Remains Resilient, Insufficient Grounds for Rate Hikes

With the release of the U.S. June employment report imminent, both policymakers and markets are focusing on economic fundamentals.

In an interview, Hassett emphasized that "the argument for raising interest rates is not that strong at the moment." He stated that under current economic conditions, there is no compelling reason to support further rate hikes. Meanwhile, he did not downplay the economy’s vitality, explicitly pointing out that multiple indicators point to another strong jobs report, indicating that the U.S. labor market can continue its robust performance.

Regarding the situation in the Strait of Hormuz and its role in global transportation, he offered an expectation that oil prices could decline. He stated that once traffic in these waters truly returns to normal operations, the daily number of transiting vessels will rebound to over 100. At that point, a large volume of oil will flood the market, and energy prices could even fall below pre-conflict levels.