What it would mean to have Kevin Hassett as Fed chair
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Kevin Hassett. Photo: Al Drago/Bloomberg via Getty Images
Odds are building that President Trump will appoint White House economic adviser Kevin Hassett as the next Federal Reserve chair.
Why it matters: The pick would put a Trump loyalist in the world's most powerful economic policymaking seat, allowing him to push for the much lower interest rates the White House has been demanding.
- Hassett would have closer ties to the sitting president than any Fed chair appointee has had in modern times.
Driving the news: Over the weekend, Trump told reporters that he had decided who will succeed Fed chair Jerome Powell. "I know who I am going to pick, yeah," Trump told reporters on Air Force One. "We'll be announcing it."
- That comes days after a report from Bloomberg that Hassett is seen within the administration as the frontrunner.
- Odds that Trump will nominate Hassett as Fed chair have soared to 80% on Kalshi — up from 40% before the Bloomberg report. The betting site has had Hassett in the lead for months, though never by such a huge margin.
- Kevin Warsh is a distant second, with a 13% chance that the former Fed governor will be nominated.
Between the lines: The Bloomberg report had four co-authors who are deeply sourced at the Treasury Department and White House, and the Trump administration did not push back against the report in any meaningful way.
- Trump's comment that he has already decided also seems to point to Hassett, the lone candidate who's on the White House staff and therefore frequently gets face time with the president.
- Treasury Secretary Scott Bessent, who is leading the interview process, has said that Trump would announce his decision before Christmas — but Trump's comments suggest it is not the wide-open contest that the formal interview process would imply.
- That means that any fallout from the Fed's likely fractured interest rate decision next week might soon be overshadowed by Trump's pick to lead the central bank.
The intrigue: Hassett himself gently pushed back on Bloomberg's reporting in an interview Sunday.
- "I am not sure that Bloomberg has the story right," Hassett told "Face the Nation," before adding that he was "honored" to be among those under consideration.
- But Hassett acknowledged that financial markets had a "very, very positive" response to the reporting, noting a drop in Treasury yields that reflected expectations of lower interest rates in the months ahead.
- "I think that the American people could expect President Trump to pick somebody who's going to help them have cheaper car loans and easier access to mortgages at lower rates — and that's what we saw in the market response to the rumor about me," Hassett said.
Yes, but: Even if the Fed cuts short-term rates, lower long-term rates — those that determine borrowing costs for homes, autos and more — are no sure thing if financial markets believe the Fed is simply doing Trump's bidding, with little regard for inflation.
- That perception might be difficult for a pick like Hassett to shake, given his relationships with the White House.
Go deeper: What to know about Trump's finalists to replace Powell as Fed chair
