Futu News compiled from Wall Street News, Jinshi, and Cailian Press.
If Hassett is chosen, Trump will place a close ally whom he knows and trusts well within the independent Federal Reserve. Hassett is perceived to bring Trump's preferred inclination toward interest rate cuts into the Fed, a direction Trump has long sought to control. Hassett is considered to be highly aligned with Trump's economic views, including the belief that interest rates should be lowered. The news drove U.S. stocks higher to intraday peaks and pushed U.S. Treasury yields lower.
According to Bloomberg, multiple sources familiar with the matter revealed that as the Trump team enters the final stages of selecting the next Federal Reserve Chair, Kevin Hassett, Director of the White House National Economic Council, is being considered by the President's advisors and allies as the top candidate.
Several sources privately indicated that if Hassett takes office, it would mean that Trump has placed a very familiar and fully trusted close ally within the nominally independent Federal Reserve. More importantly, Hassett is seen as the person who could bring Trump’s desire for “significant interest rate cuts” into the Federal Reserve — something Trump has long dreamed of achieving.
However, individuals familiar with Trump's decision-making style have pointed out that until he makes an official announcement, anything is possible, and a “Trump-style surprise” could happen at any time.
White House Press Secretary Karoline Leavitt responded by saying: “No one knows what President Trump will do until he actually acts. Stay tuned!”
Why is the outcome of the new Federal Reserve Chair so important?
Historically, the nomination of the Federal Reserve Chair and governors has been the most direct way for U.S. Presidents to influence the Federal Reserve. Nominating a “shadow Fed Chair” would allow Trump to voice opinions externally and participate in policy communication during Powell’s remaining term, thereby influencing monetary policy.
Trump nominated current Chair Powell during his first term but later regretted it because Powell did not cut interest rates as quickly as Trump had hoped.
Earlier this summer, Futu News reviewed the potential candidates for the new Federal Reserve Chair.Reference: Who will succeed Powell? The all-dovish "shadow Fed Chair" could trigger a "cliff-like interest rate cut"!
What are Hassett's views on economic policy?
Hassett has maintained a close relationship with Trump, serving him for nearly a decade and being one of the few advisors who has both won the President’s favor and retained his trust. During Trump’s first term, he held two positions before joining a private equity firm founded by Trump’s son-in-law Jared Kushner, where he provided economic policy advice during the 2024 presidential campaign.
Hassett served as the Chairman of the Council of Economic Advisers and is a conservative economist who previously taught at Columbia University and worked at right-wing think tanks such as the American Enterprise Institute. Early in his career, he also served as an economist at the Federal Reserve.
Hassett’s economic views align closely with Trump’s, and he openly advocates for interest rate cuts, echoing Trump’s stance that the Federal Reserve should be more supportive of economic growth. In a media interview on November 20, Hassett stated that if he were the Fed Chair, he would cut rates immediately because the data suggests it is necessary. He also criticized the Fed for allowing inflation to spiral out of control post-pandemic.
As news spread of Hassett taking the lead, the U.S. Treasury bond market responded with a rise, and the yield on the 10-year Treasury bond fell below the 4% mark for the first time this month. Traders subsequently increased their bets on significant rate cuts over the next year, reflecting the market's widespread belief that Hassett would implement the aggressive interest rate cuts long advocated by U.S. President Trump.
Jordan Rochester, Head of Macro Strategy at Mizuho Securities' London branch, stated that the market has concluded the dollar will weaken, short-term rates will decrease starting from the May meeting next year, and the yield curve will steepen.
Neil Dutta of Renaissance Macro Research predicted that Hassett, if appointed, might struggle to build consensus within the Federal Open Market Committee. “Even as Chair, Hassett’s 2026 will not be easy,” he analyzed. “He appears most susceptible to Trump’s influence, whereas Bessent seems to possess greater independence.”
The financial blog Zerohedge commented:
For a long time, Federal Reserve Governor Chris Waller was widely regarded as the frontrunner for the position, but his chances have recently declined amid rumors that Hassett is Trump’s preferred candidate. On Polymarket, Hassett’s odds surged to a new contract high of 50%.
On Tuesday, Trump's newly appointed Federal Reserve Governor Milan reiterated his view that the U.S. economy requires significant interest rate cuts, further strengthening market expectations of a potential substantial decline in rates. The Federal Reserve typically adjusts interest rates in increments of 25 basis points, but occasionally implements adjustments of 50 basis points or more.
David Robin, interest rate strategist at TJM Institutional Services, noted: 'With Hassett joining, the Federal Reserve Board may have two voting members appointed during Trump’s second term. Starting from next June, the Fed might advocate more aggressively for a 50-basis-point rate cut. Unless there is strong opposition, the Federal Reserve Chair usually gets what he wants.'
And what about Powell?
The Federal Reserve has long been a target of Trump's attacks. Trump has criticized Powell for being too slow to cut interest rates and publicly stated that he is considering firing him. Previously, Trump continuously encouraged Bessent to "work hard to influence" the Fed Chair to lower key interest rates, even jokingly telling Bessent: "If you don't solve the problem quickly, I'll fire you." In response, Bessent replied:
"If you were in the room at the time, you would know he was definitely joking. Monetary policy has now become extremely complex; it's no longer as simple as just cutting interest rates."
The next Federal Reserve Chair is expected to be appointed to a 14-year term as a Fed Governor starting from February 1. The seat set to expire is currently held by Stephen Miran, who is currently on unpaid leave from the White House Council of Economic Advisers.
Powell’s term as Federal Reserve Chair will end in May 2026, and he can serve another two years as a board member. There are currently divisions within the Fed regarding the necessity of further interest rate cuts. Based on recent statements by New York Fed President John Williams, the market widely expects the FOMC to approve a third consecutive rate cut at its December meeting.
Powell has not indicated whether he will continue serving as a governor after his term as Chair ends. If he steps down, the administration will have another opportunity to nominate a governor next year.
Where does the selection process for the new Federal Reserve Chair stand now?
Since the start of the transition process this summer, Bessent has interviewed nearly a dozen candidates, narrowing the final list to five: Hassett, Warsh, Waller, Michelle Bowman, the Fed’s Vice Chair for Supervision, and Rick Rieder, BlackRock’s Chief Investment Officer.
Bessent told CNBC on Tuesday that Trump is highly likely to announce the nominee for Federal Reserve Chair before Christmas on December 25. Trump himself has hinted that the selection process is nearing its end, stating on November 18 that he has a "favorite" in mind but did not disclose the name.
Bessent said the final round of interviews will conclude this week, with some of the finalists soon meeting White House Chief of Staff Susie Wiles and Vice President JD Vance. The final nominee must still go through Senate confirmation.
Editor/Rocky