The White House states that increased productivity creates conditions for the Federal Reserve to cut interest rates

White House economic adviser Kevin Hassett said in a CNBC interview on Monday that he believes the U.S. economy is experiencing a “positive supply shock” triggered by productivity gains brought about by capital expenditures and artificial intelligence, which would create conditions for the Federal Reserve to cut interest rates.

“ If we’re going through this kind of supply shock caused by large-scale capital spending and productivity improvements from AI, it will continue to put downward pressure on inflation, thereby easing the policy pressure on the Federal Reserve. They should be able to lower interest rates,” Hassett said.

Hassett also said that if Federal Reserve chair nominee Kevin Warsh, nominated by President Trump, is formally sworn in, he expects the Federal Reserve to implement rate cuts.

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Byline: Guo Mingyu