Hassett: US-Iran deal would lower oil prices, create room for Fed rate cuts

Kevin Hassett, Chairman of the U.S. White House National Economic Council (NEC), said an agreement between the United States and Iran would cause a sharp drop in energy prices, creating room for the Federal Reserve to cut interest rates. Hassett stated that he expects energy prices to plummet if a deal is reached, which would give the Fed sufficient space to take appropriate action and lower rates. While emphasizing his respect for the Fed's independence, Hassett praised Fed Chairman Kevin Warsh, who was sworn into office on May 23. His comments come as rising U.S. fuel prices, driven by Iran's blockade of the Strait of Hormuz, are creating a political burden for President Donald Trump and the Republican Party ahead of the November midterm elections. Hassett diagnosed that the recent acceleration in inflation has been primarily triggered by energy prices. He noted that while energy prices are a clear concern in recent data releases, core inflation has remained almost unchanged, adding that a drop in energy prices could even lead to negative inflation.