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A top Federal Reserve official has accused the White House of escalating its attack on the central bank after the Trump administration lashed out at a study that suggested tariffs were hurting Americans.
Kevin Hassett, director of the National Economic Council, said on Wednesday that New York Fed economists should be “disciplined” over what he said was a “partisan” paper showing US businesses and consumers were shouldering most of the cost of President Donald Trump’s levies.
Minneapolis Fed president Neel Kashkari hit back on Thursday, describing Hassett’s remarks as “just another step to try to compromise the Fed’s independence”.
“Over the last year we’ve seen multiple attempts to try to compromise the Fed’s independence including . . . when the Department of Justice served a subpoena to the board of governors over some building expenses. It’s really about monetary policy,” Kashkari said at an event in North Dakota.
The remarks from Kashkari, who holds a vote on the rate-setting Federal Open Market Committee, are a rare example of a senior central bank official publicly rebuking the administration, which has repeatedly criticised policymakers for not bringing down borrowing costs more quickly.
Responding to the comments on Thursday, White House spokesperson Kush Desai said: “Director Hassett has consistently made clear publicly his respect for the Fed’s independence — independence that is undermined by flawed research designed for news headlines rather than peer review.”
He added: “Director Hassett’s comments yesterday were clearly a call for the Fed to return to the practice of upholding the highest of academic standards. This product fell short of that. All institutions, especially the Fed, should strive to uphold the gold standard of rigorous research.”
Accusations by former senior US officials and some lawmakers that the White House is seeking to interfere with the Fed have grown in recent months as the president intensifies a campaign to persuade the central bank to cut rates.
Chair Jay Powell last month hit out at the administration after the DoJ launched a criminal probe into his conduct over a $2.5bn renovation of the Fed’s headquarters, a move he said was motivated by Trump’s desire for lower rates.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” Powell said at the time.
Trump has also sought to sack governor Lisa Cook over allegations of mortgage fraud, which she denies. It is the first time a president has attempted to remove a Fed governor.
Kashkari said on Thursday that Fed officials were attempting to “tune out the noise” from the political turmoil and focus on their objective of maximum employment and stable prices.
“The louder the noise gets turned up, the more we hug the mast of what is our mission . . . continue to double down and just focus on that,” he said.
The New York Fed paper, which was published last week, found that US businesses and consumers paid nearly 90 per cent of the cost of Trump’s tariffs in 2025, with the burden decreasing slightly as the year progressed.
On Wednesday, Hassett slammed the paper as “an embarrassment” and said it did not fully capture the benefits of the president’s levies.
“It’s I think the worst paper I’ve ever seen in the history of the Federal Reserve system,” he told CNBC. “The people associated with this paper should presumably be disciplined.”
“What they’ve done is they’ve put out a conclusion which has created a lot of news that’s highly partisan based on analysis that wouldn’t be accepted in a first semester econ[omics] class.”
