National Economic Council Director Kevin Hassett said productivity gains should help keep core prices under control during a March 2026 interview.
His perspective suggests that the U.S. economy can absorb short-term price volatility without requiring aggressive monetary tightening. This approach seeks to prevent a cycle of rate hikes that could stifle economic growth while inflation remains managed by efficiency gains.
Speaking on Bloomberg Surveillance on March 19, 2026, Hassett warned against reacting to current energy market volatility. He said it would be a mistake for the Federal Reserve or the European Central Bank to hike rates in response to what looks like a temporary oil shock [1].
This warning follows data showing oil prices have spiked roughly 10% year-over-year [2]. Hassett said such a spike is a transient event rather than a long-term inflationary trend. He said that reacting with higher interest rates would harm the broader economy by addressing a symptom rather than a systemic issue [1].
Beyond energy prices, Hassett emphasized the role of productivity in stabilizing the economy. He said productivity gains should help keep core prices under control [1]. By increasing the output per worker, the economy can sustain growth without triggering the price spirals, and the central bank intervention that typically follows.
Hassett also addressed the leadership of the Federal Reserve. He said Powell staying on at the Fed after his term ends would provide needed continuity for monetary policy [2]. This support for Chair Jerome Powell comes as the Fed manages the balance between controlling inflation and maintaining a stable labor market.
His comments align with a strategy of policy stability, suggesting that changing leadership during a period of economic transition could create unnecessary market uncertainty [2].
“"Productivity gains should help keep core prices under control."”
Hassett's position signals a preference for a 'look-through' approach to inflation, where policymakers ignore volatile energy costs if core inflation remains stable. By advocating for Jerome Powell's continued leadership and cautioning against rate hikes, the National Economic Council is prioritizing market stability and productivity-led growth over aggressive inflation targeting.
