Kevin Hassett, head of the White House National Economic Council, pointed to AI-driven productivity gains as a key factor likely to ease inflation. He believes the recent uptick in the 10-year Treasury yield, which hovered near 4.7%, is only temporary. This rise in yields reflects borrowing costs and long-term interest rate expectations, key for markets and consumers alike.
Hassett’s view is that AI technology is generating a supply-side shock that increases efficiency and production, ultimately pushing prices lower. His outlook suggests this dynamic could soften inflationary pressures, which in turn might prompt the Federal Reserve to consider cutting rates sooner than expected in 2026.
Markets have started pricing in this possibility, reading Hassett’s comments as a signal for a more dovish Fed stance. Traders and investors will be watching closely for any confirmation from Fed Chair Jerome Powell during upcoming Federal Open Market Committee meetings, especially indications that the central bank acknowledges AI’s role in influencing inflation trends.
