White House National Economic Council Director Hassett stated that interest rates could remain unchanged; however, Hamak and Kashkari both advocated for a 25 basis point rate hike at the July FOMC meeting, escalating the policy disagreement from "when to adjust interest rates" to "how to determine the nature of inflation."
Hassett prioritizes growth and investment, believing that current data is insufficient to support a rate hike; the two hawkish members, however, worry that successive supply shocks such as energy and tariffs, coupled with new demand generated by AI data center investment, could cause inflation to evolve from a short-term disturbance into a long-term change in corporate pricing and household expectations.
If the hawkish camp continues to expand, market expectations for rate cuts may be further postponed; and the White House's continued opposition to rate hikes will also intensify scrutiny of the Federal Reserve's independence and commitment to combating inflation.
