President Trump told reporters Sunday that he has decided who he will nominate as the next leader of the Federal Reserve, but did not provide a name, even as speculation swirls that he will tap Kevin Hassett, the current National Economic Council director, to fill the role starting in May.
Hassett, who served as chair of the Council of Economic Advisers during the first Trump administration, has been an enthusiastic supporter of the president’s economic policies. If Hassett is chosen and confirmed, Trump would gain a close ally at the top of the nation’s central bank, one who could be expected to push for the president’s preferred policies, including lower interest rates — something Trump has been demanding for months from the embattled current Fed chief, Jerome Powell.
Powell was nominated for the top position by Trump in 2017, replacing Janet Yellen starting in 2018, and President Biden reappointed Powell for another four-year term, ending in May 2026. Over the past few months, Trump has expressed great frustration with Powell for his caution in cutting rates — driven by concerns about Trump’s tariffs sparking new inflationary pressure — while aiming a steady stream of insults at the Fed chief, calling him a “a complete moron,” a “knucklehead” and a “major loser.”
Hassett on Sunday lightly pushed back against a report by Bloomberg that he is Trump’s pick, telling CBS News’s “Face the Nation” that while he is honored to be mentioned in the conversation, he is “not sure that Bloomberg has the story right.”
At the same time, Hassett noted that the markets were responding positively to the news, with interest rates dropping in the expectation that more rate cuts by the Fed are in store. “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,” he said.
Still, the path ahead for interest rates may be rockier than the initial reaction suggests. While stocks and other assets could jump on the promise of easier monetary conditions, some economists are worried that if rates are cut too much, inflation could move higher, sparking a new cycle of rate hikes and economic turmoil.
More broadly, some economists are worried about what could happen if the Fed becomes more politicized. Once his new chair takes control, Trump will have appointed a majority of the seven members of the Federal Reserve's Board of Governors, giving him significant influence over the bank’s actions.
In the meantime, the markets may have to contend with what Reuters’s Mike Dolan calls a “shadow Fed Chair” for the next five months. If Hassett is nominated, “his every public utterance could be market-moving,” Dolan writes. “How his views compare and contrast with Powell's over that period will be forensically examined — with the chance of considerable market volatility where they differ.”