Hasset pressures the Federal Reserve (FED) to cut interest rates immediately! Can strong GDP shake Powell's determination?

Kevin Hassett, the Director of the National Economic Council, urged the Federal Reserve (FED) to cut interest rates immediately. His remarks echoed President Trump’s push for more significant rate cuts, and Hassett himself is also one of the candidates for the chair of the Federal Reserve (FED). The key test will come on Tuesday when the final GDP annualized rate for the third quarter will be announced. If GDP confirms a strong growth of 3.2%, it will raise questions about why the Federal Reserve (FED) is cutting rates during an overheated economy.

Hassett's 'Immediate Rate Cut' Argument and The Federal Reserve (FED) Independence Crisis

Hasset's call for the Federal Reserve (FED) to immediately cut interest rates has raised serious concerns about the independence of the Federal Reserve (FED). The Federal Reserve (FED) should set interest rates without political interference, but the Trump administration is breaking this tradition. In an interview with Politico, when asked whether “immediate interest rate cuts” were a prerequisite for the new chairman, Trump responded affirmatively.

Trump stated on Friday that he is interviewing three to four candidates for the chair of The Federal Reserve (FED) and expects to decide soon on whom to nominate to replace Powell. “I think each of them is a good choice.” He is unsure if he will announce the candidates before the end of the year but indicated that a decision will be made “in the coming weeks.” Currently, Hassett is considered a leading candidate. Severin Borenstein, dean of the George Washington University School of Business, commented, “As far as I know, he is willing to take a more aggressive stance on interest rate cuts.”

Gabriel Chodorow-Reich, an associate professor of economics at an American university, pointed out: “It is historically rare for a president to call for interest rate cuts.” Lowering rates can reduce costs across the board, from mortgage and auto loans to credit card repayments, without exception. However, significantly lowering rates during non-recession periods could exacerbate inflation. This is the core value of the independence of The Federal Reserve (FED): the ability to resist short-term political pressure and make long-term correct decisions.

Three Major Methods Used by Trump Administration to Pressure The Federal Reserve (FED) to Lower Interest Rates

Public Criticism of Powell: Trump referred to Powell as a “complete fool” last month, continuing to undermine his authority.

Chairman Candidate Requirements: Clearly stipulates that the new chairman must “immediately cut interest rates,” making the policy position a standard for appointment.

Legal Attack on Director: Attempting to dismiss The Federal Reserve (FED) director Cook, accusing him of being involved in mortgage fraud, testing the replacement authority.

Trump has previously tested the limits of the Federal Reserve's independence, advocating for the dismissal of Fed Board Member Cook, accusing her of mortgage fraud. Cook's lawyer denied these allegations, stating they are “politically motivated.” The Supreme Court will hear the case next month. In cases involving the FTC and the removal of independent agency members, the Supreme Court seems inclined to support the President. However, Chodorow-Reich pointed out: “The Supreme Court appears to have drawn a line between the Federal Reserve and other agencies, and for now, they seem to support maintaining the independence of the Federal Reserve.”

The Definitive Test of Tuesday's GDP Data

If the report shows that the U.S. economy has grown more than 3% for two consecutive quarters, then people will question why the Federal Reserve (FED) is cutting interest rates three times in 2025. It does seem a bit unusual to lower interest rates while inflation is still above the target level of 2%, the unemployment rate is low, and the stock market is repeatedly reaching new highs. On Tuesday night at 21:30, the U.S. will announce the final annualized GDP growth rate for the third quarter, the final personal consumption expenditures (PCE) growth rate for the third quarter, and the final annualized core PCE price index growth rate for the third quarter. The report is expected to confirm that the annualized GDP growth rate is 3.2%.

A GDP growth of 3.2% is considered strong by historical standards and typically does not require interest rate cuts for stimulus. The report is expected to show that technology investments and spending by affluent households are the core drivers of current economic growth. However, due to the impact of the government shutdown, economic growth is expected to significantly slow to around 1% in the next quarter. This anticipated slowdown is a reason why the Federal Reserve (FED) may continue to cut interest rates, but if GDP data is revised upward or exceeds expectations, this reasoning will be weakened.

Bill Adams, chief economist at Comerica Bank, stated that the CPI data should give the Federal Reserve (FED) confidence to cut interest rates again next year. “The Federal Reserve (FED) will be pleased to see a slowdown in both the overall Consumer Price Index and the Core Consumer Price Index, as the report strengthens the case for more rate cuts in 2026.” A report by TD Securities titled “2026 Commodity Outlook” indicates that the Federal Reserve (FED)'s rate cuts, continuous currency depreciation, supply-side dynamics, and diversified demand are expected to drive gold prices to break through new highs of $4,400 in the first half of next year.

Commodity analysts stated: “The lower cost of holding cash driven by The Federal Reserve (FED), along with expectations that the yield curve will steepen and potential concerns about the independence of the The Federal Reserve (FED), lead us to predict that gold prices will reach a quarterly historical high of $4,400 per ounce in the first half of 2026.” TD Securities believes that the long-term price range for gold will remain between $3,500 and $4,400 per ounce.

Dahlman Rose bets that platinum and palladium will be the kings of commodities in 2026

However, TD Securities has a completely different view on platinum group metals. TD Securities has selected platinum and palladium as the most important commodities for 2026, with price forecasts about 20% higher than the market's general expectations. They wrote: “The macroeconomic situation remains robust, and the trend of de-urbanization has had a significant impact on the demand for platinum group metals, with a clear hoarding trend expected to continue until 2026.”

As for silver, TD Securities pointed out that if you like “silver squeeze,” you will definitely love “silver flood.” Earlier this year, the market unknowingly fell into a squeeze situation, and entering 2026, an epic “silver flood” led to the largest inventory replenishment in the history of the London Bullion Market Association (LBMA). Analysts indicated that this large-scale replenishment, which does not require price increases to replenish global inventories, will have a significant impact on the price outlook for silver. They predict that silver prices will fall in the early part of next year and will struggle to recover to current levels by 2026, with prices expected to hover in the mid-$40 per ounce range.

As Christmas approaches, Wall Street holds its breath, alert to the potential market impact of the U.S. third-quarter GDP data and low liquidity. The selection of the new chairperson of The Federal Reserve (FED) remains undecided, and whether Trump will bring a “surprise” this Christmas is still uncertain. The U.S. market will open for half a day on Wednesday and will be closed on Thursday for Christmas. This shortened trading period means that liquidity will further dry up, and any unexpected data could trigger significant volatility.

Investors originally expected the U.S. stock market to continue the “Santa Claus Rally” during the holiday season, but market volatility may persist until the end of the year. According to the “Stock Trader's Almanac,” since 1950, the “Santa Claus Rally” typically refers to the average increase of 1.3% in the S&P 500 index during the last five trading days of the year and the first two trading days of the next year. However, this year, technology stocks are under pressure due to concerns over AI investment returns, which may break this historical pattern.