Hassett calls Fed rate move 'prudent' despite Trump's call for steeper cuts

President Trump's top economic adviser praised the Federal Reserve on Thursday for making a "prudent" decision on interest rates, despite the president's calls for a much steeper rate cut.

Kevin Hassett, director of the White House National Economic Council, backed the Fed's move to cut interest rates by 0.25 percentage points Wednesday after months of White House pressure and slowing job gains.

"The bottom line is that moving kind of slow and steady and heading towards a target, watch the data come in, that's what prudent policy is," Hassett said Thursday in an interview with CNBC's "Squawk Box."

Members of the Federal Open Market Committee — the panel of Fed officials responsible for setting interest rates — voted 11-1 Wednesday in favor of a 0.25 percentage point rate cut, which is the standard size of most Fed rate adjustments.

Only Fed board of governors member Stephen Miran, who is on leave from the White House as Trump's top economist, voted for a 0.5 percentage point rate cut.

While the small Fed cut may seem like a victory for Trump, the president has called for a much lower interest rate range than the one set by the Fed this week. The president has urged the Fed to cut its baseline interest rate by several percentage points this year — a move that the bank would typically make in times of severe economic crisis.

"I know that my colleague Stephen wanted to go to 50 [basis points], but I think 25 was pretty broad consensus, and I think that's a good first step in the right direction to much lower rates," Hassett told CNBC.

Hassett said the Fed's move made sense in a moment where inflation is above the bank's target of 2 percent and economic growth is expected to rise during the third quarter — two conditions that would not normally lead the Fed to adding more fuel to the economy.

Powell, however, said the Fed rate cut was made necessary by an "unusual" slowdown in the U.S. job market, not by unexpected economic strength.

The U.S. has added an average 29,000 jobs each month in 2025, well below the typical level needed to prevent the unemployment rate from rising. Powell said Wednesday that an abnormal decline in both the supply of and demand for workers has raised concerns among Fed officials of a steeper slowdown.

Powell said that while the Fed expects inflation to increase due to Trump's tariffs, the bank is seeing the labor market take far more damage under the weight of higher import taxes and steep cuts to immigration.

"Our policy had been really skewed toward inflation for a long time. Now we see that there's downside risk, clearly, in the labor market, so we're moving in the direction of more neutral policy."