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White House says increased productivity means Fed can cut rates

BY Reuters | ECONOMIC | 04/06/26 11:36 AM EDT

April 6 (Reuters) - White House economic adviser Kevin Hassett told CNBC on Monday that he believes a "supply shock" in the U.S. economy caused by capital spending and higher productivity from artificial intelligence will allow the Federal Reserve to lower interest rates.

"If we have a supply shock like we're seeing because of all this capital spending ... AI increasing productivity, it puts downward, downward pressure on inflation, and that should take the pressure off the Fed. They should be able to lower rates," Hassett said.

Hassett said he expects interest rates will be lowered if Kevin Warsh, President Donald Trump's nominee to become Federal Reserve chair, takes the position.

(Reporting by Ryan Patrick Jones in Toronto; Editing by Katharine Jackson)

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