(Bloomberg) – Federal Reserve Bank of Minneapolis President Neel Kashkari said recent comments by National Economic Council Director Kevin Hassett critical of a New York Fed study on tariffs undermine the central bank’s independence.

“This is just another step to try to compromise the Fed’s independence,” Kashkari said Thursday at an event in Fargo, North Dakota, of Hassett’s remarks. “Over the last year we’ve seen multiple attempts to try to compromise the Fed’s independence.” He added, “It’s really about monetary policy.”

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WATCH: Federal Reserve Bank of Minneapolis President Neel Kashkari criticizes National Economic Council Director Kevin Hassett’s comments about a New York Fed study on tariffs.Source: Bloomberg

Hassett on Wednesday said the New York Fed economists’ study, which found US companies bear most of the burden from President Donald Trump’s tariff hikes, was “an embarrassment” and that the researchers associated with it should be “disciplined.”

Kashkari said research conducted by Fed district banks reflect efforts “to get better and learn about the economy — by having this breadth of opinions.”

“We are doing our very best to make the best assessment of the economy based on data and analysis,” the Minneapolis Fed chief said.

‘Hug the Mast’

Kashkari also pointed to the current Justice Department investigation of the Fed over building renovations as evidence of Trump administration pressure. Chair Jerome Powell in January said, when served subpoenas, that the reasons for the investigation were a pretext to punish him for not cutting interest rates quickly enough. Trump has repeatedly said the Fed should cut rates aggressively.

“The louder the noise gets turned up, the more we hug the mast of what is our mission,” Kashkari said, citing the Fed’s mandate to achieve price stability and maximum employment.

The Minneapolis Fed chief was also asked about Kevin Warsh, whom Trump has said he’ll nominate to be the next Fed chair. Powell’s term expires in May. Warsh has repeatedly criticized various elements of the Fed and said he wants to revamp the institution.

“I look forward to working with him and hearing his ideas,” said Kashkari, who worked with Warsh during the financial crisis. “We can always do better. If we’ve got good ideas on how to improve things, let’s go take them forward.”

Balance Sheet

Warsh has said he wants to reduce the Fed’s balance sheet, which surged in size during both the financial crisis and the pandemic, when the Fed was buying assets to shore up the economy. Kashkari argued there are many technical reasons why the balance sheet — currently at $6.6 trillion — is much bigger today than it was before those crises, including foreign demand for US currency and the amount of reserves banks have to maintain at the Fed for liquidity purposes.

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“We’ve shrunk our balance sheet quite a bit in the last few years, and I’m not sure that we can shrink it much further from here without making some other fundamental changes to the way the financial system operates,” he said.

On interest rates, Kashkari said the Fed’s benchmark is currently likely close to “neutral” — the point where they’re neither restricting the economy nor stimulating it. The Fed held rates unchanged at its January meeting, a decision Kashkari supported, after cutting them three consecutive times in the last few months of 2025.

–With assistance from Matt Shirley.

Kashkari Rips Hassett Criticism of NY Fed Tariff Analysis

Kashkari Rips Hassett Criticism of NY Fed Tariff Analysis

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