White House Economic Adviser Says Iran Deal Could Sink Oil Prices, Give Fed More Room to Cut Rates

Kevin Hassett, director of the White House National Economic Council, said a deal with Iran could send global oil prices lower and give the Federal Reserve more room to cut interest rates.

Hassett told Fox News on May 24 that energy prices would fall sharply as soon as an agreement with Iran is reached, Bloomberg reported. In that scenario, the Fed would have much greater scope to lower rates.

President Donald Trump had earlier written on social media that negotiations with Iran were proceeding in an orderly and constructive manner.

Hassett also identified energy prices as the main recent source of inflation pressure. Recent inflation data showed rising energy costs were concerning, while core prices barely moved, he said. If energy prices fall again, he added, even negative inflation is possible.

He also said he respects the Fed's independence. Speaking about Kevin Warsh, who recently became Fed chair, Hassett said he would make decisions independently.

Meanwhile, the U.S. consumer price index rose 3.8% in April from a year earlier, the fastest pace in about three years. Core CPI, which excludes food and energy, increased 2.8%.