White House Dismisses AI Market Panic and Defends Rate Hold
Kevin Hassett states the Federal Reserve has no reason to raise rates despite 3.4% inflation.
White House economic adviser Kevin Hassett stated the Federal Reserve has no compelling reason to raise interest rates. This position holds despite annual inflation rising to 3.4% in August. He argued that recent data supports keeping the benchmark rate unchanged at 3.75%.
Hassett also dismissed fears that AI safety warnings will trigger market turmoil. He characterized recent executive concerns as thoughtful rather than urgent. The administration maintains that technological risks do not justify immediate policy shifts or trade restrictions.
Fed Policy Remains Unchanged
The current benchmark rate sits at 3.75% ahead of Wednesday’s decision. Hassett noted that annualized inflation is running at just about 1%. He cited historical precedents under former Chairman Alan Greenspan to support a pause.
The administration opposes President Trump’s threats to halt trade with deficit partners. Hassett said he does not expect trade to drop to zero. He affirmed support for Federal Reserve Chairman Kevin Warsh regardless of the outcome.
AI Safety Risks Downplayed
Hassett described an essay by Anthropic CEO Dario Amodei as a thoughtful letter. He endorsed the call for independent observers during model training. He compared these proposed inspectors to bank supervisors.
The adviser warned that foreign development of biological weapons poses a bigger risk. He argued that a malevolent actor with superior AI is a greater threat than domestic safety issues. He emphasized the need to pace development while ensuring system safety.
Preserving Technological Advantage Over China
President Donald Trump opposed slowing down the domestic artificial intelligence industry. He argued that maintaining a technological advantage over China is critical. He stated that whoever wins AI wins global leadership.
Trump believes the US should pay the lowest interest rate in the world. He cited the strength of the US economy as the primary reason. The administration prioritizes preserving America's edge in the AI sector.
