President Trump is initiating a final round of interviews this week to select a new chair for the Federal Reserve, aiming to replace Jerome Powell. Kevin Hassett, the current director of the National Economic Council and a prominent advisor, is considered the leading candidate. Initial interviews are set to begin with former Fed Governor Kevin Warsh, among others.
In discussions with reporters, Trump stated he has a clear idea of his preferred choice for the position. Beyond Hassett, potential nominees include Fed Governors Christopher Waller and Michelle Bowman and BlackRock fixed income head Rick Rieder. Market speculation suggests a strong expectation for Hassett’s nomination, with a December CNBC survey indicating that 84% believe he is the frontrunner.
However, concerns persist among investors that Hassett may act on Trump’s directives rather than make independent decisions regarding interest rates. In a recent statement, Hassett emphasized his commitment to making choices based on sound judgment, not political pressure. This week, he reiterated that drastic cuts should not occur if inflation rises, reflecting a cautious approach.
After a series of canceled meetings with candidates last week, many are questioning whether the current interviews are a final formality or suggest a shift in Trump’s strategy. Powell’s term ends in May 2026, and there are anticipations that he may soon become ineffective in his role given the political landscape surrounding the Fed.
Economists predict that further interest rate cuts are imminent but emphasize the need for careful consideration of economic indicators, particularly in light of ongoing inflationary pressures and employment fluctuations.
Why this story matters:
- The choice of a new Federal Reserve chair can significantly influence U.S. economic policy and market stability.
Key takeaway:
- Kevin Hassett is positioned as a leading candidate, with potential implications for how the Fed handles interest rates.
Opposing viewpoint:
- Concerns over Hassett’s alignment with Trump may raise doubts about the independence of future Fed decisions.
