Part 2/12:
Hassett begins by reflecting on the Federal Reserve's modest 25 basis point rate increase, describing it as akin to steering the Queen Mary—implying that central banks must shift course carefully and deliberately. He emphasizes the importance of slow and steady adjustments, waiting to see how economic data responds—an approach he deems prudent given the complexity of the current environment.
He acknowledges that while some colleagues favor larger moves, like a 50 basis point hike, consensus favors caution. The ultimate goal, Hassett notes, is to lower rates gradually in pursuit of a very low, stable inflation rate, ideally around 2%. This measured approach aligns with traditional central banking principles aimed at balancing growth and inflation.