Kevin Hassett grabs pole position in race to be Trump's new Fed Chair

Straits Times

16-07-2025

Mr Kevin Hassett, one of US President Donald Trump's longest-serving economic aides, is the early frontrunner to replace Mr Jerome Powell as Federal Reserve chief next year, according to people familiar with the process.
Mr Hassett, director of the National Economic Council, and Mr Kevin Warsh are the top two contenders in an Apprentice-like contest run by Mr Trump out of the White House. Treasury Secretary Scott Bessent is advising on selection – but could get the job himself if others fail to impress – while Fed governor Christopher Waller remains the dark horse, said people familiar with the deliberations.
Mr Trump has raised the succession stakes by routinely blasting Mr Powell for keeping interest rates too high, and saying he will pick a Fed chair who wants to cut them. It has left investors worried that the central bank's autonomy from political pressure – key to its ability to fight inflation and support the dollar – is in growing danger.
Mr Hassett has echoed Mr Trump's Fed critique. In a Fox Business interview this month, he noted that the central bank is an independent agency. But he said that by cutting rates before last year's presidential election – and then keeping them on hold more recently, citing inflation risk from tariffs – it deserved the president's barbs.
'I think that that raises the spectre that they're not being non-partisan, they're not being independent,' he said.
'There to serve'
Once seen as a measured right-leaning economist, aligned with politicians like Mr Mitt Romney, Mr Hassett has been in the Trump orbit for close to a decade now. He has approached the National Economic Council job very differently from predecessors like Mr Gary Cohn, who sought to damp down the president's impulses on tariffs – and did not last long.
Mr Hassett has gone full Maga instead – amplifying Mr Trump's instincts on trade, taxes, inflation or the Fed, in myriad TV appearances.
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That is what it takes in Trumpworld, according to Mr Stephen Myrow, who runs Beacon Policy Advisers, a Washington research firm.
'Anyone who has survived this long under Trump, they're not coming in with an ideology that they want to advance,' Mr Myrow said. 'They're not there to serve a school of monetary thought. They're there to serve Trump.'
What remains to be seen is how that service ethos applies to the next Fed chair – a job that is supposed to be walled off from administration priorities.
It is a multi-trillion-dollar question. Economists say autonomous central banks are better at taming inflation, so a Fed chief seen as acquiescent to the White House could trigger a slump in Treasury markets. Mr Trump's threats to fire Mr Powell have added to financial jitters set off by his trade war.
The president has taken the opposite tack, arguing that excessive Fed rates add hundreds of billions a year to America's debt service costs.
'Most qualified individuals'
The process of choosing Mr Powell is officially under way, Mr Bessent told Bloomberg TV on July 15. Along with the Treasury chief, the narrow circle of aides involved include White House chief-of-staff Susie Wiles – who has advised on Mr Trump's key hiring decisions, and is steeped in the politics of trying to ensure the US economy is thriving by next year's mid-term elections.
Trump allies say the president is deeply engaged in the choice. One adviser predicted the interview process would move quickly, since the president tends to act once he gets an idea in his head.
Mr Hassett has been telling people both inside and outside the administration that he very much wants the job – though he plays it coy when asked on TV.
He did not respond to requests for comment.
Mr Trump, asked by reporters on July 15 if Mr Bessent is the No. 1 contender to lead the Fed, said that
he is 'an option' and complimented the Treasury secretary for 'the job he's doing'.
'With Joe Biden's inflation crisis firmly past us, President Trump has been clear about the need for the Federal Reserve's monetary policy to complement the administration's pro-growth agenda,' said White House spokesman Kush Desai. 'He will continue to nominate the most qualified individuals who can best serve the American people.'
As NEC chief, Mr Hassett benefits from daily proximity to the president, with an office in the West Wing. Mr Warsh by contrast, spends much of his time shuttling between the Hoover Institution in California and New York City. Mr Trump interviewed Mr Warsh – a former Fed governor – for the chair role in 2017, but opted for Mr Powell instead because he thought Mr Warsh's views were too hawkish and he looked too young for the job.
Mr Hassett served as the head of the Council of Economic Advisers during Mr Trump's first term. His earlier career includes stints as a Fed economist and at the American Enterprise Institute, where he was director of research.
He is known as an expert on tax, and has written widely on the topic. But perhaps his most notorious book was Dow 36,000, predicting a surge in the US stock market, which was published shortly before the dotcom bubble burst. The Dow eventually hit the level predicted in his title more than two decades later.
'Very confusing'
During Mr Trump's years in exile in Florida between his first and second terms, Mr Hassett – who was doing some work for Mr Trump's son-in-law Jared Kushner's investment fund Affinity Partners at the time – also frequently got together with Mr Trump to talk through economic ideas.
Both men share a similar approach to the world and a tendency to store up grievances based on perceived slights, said one longtime friend of Mr Hassett.
Mr Trump has been voicing grievances with Mr Powell almost ever since naming him to the top Fed job. Complaints have escalated into open anger during Mr Trump's second term, when he nicknamed Mr Powell 'Too Late' and often
resorted to harsher insults .
Mr Powell's Fed has kept interest rates unchanged this year, after lowering them by a percentage point over the last few months of 2024. US central bankers say there is no rush to cut further, pointing to solid growth and a healthy job market, and arguing that they need time to see whether tariffs will boost inflation, like most economists expect.
So far, consumer prices have not seen much of a tariff jump – though there were signs in the June numbers, published on July 15, that companies are beginning to pass on trade-related costs. That has reinforced expectations that the Fed will stand pat again at its next rates meeting on July 29-30. Markets still expect a couple of cuts by year-end.
Echoing Mr Trump's 'too late' jibe, Mr Hassett accused the Fed in his Fox interview of 'falling behind the curve' compared to what other central banks are doing. He has also joined other Trump aides and Republican lawmakers in voicing alarm about the rising costs of the Fed's headquarter renovations – which has become the president's latest stick to beat Mr Powell with.
One goal may be to pressure Mr Powell to leave the Fed board when his tenure as chair ends in May next year – rather than staying on in the role of governor, where his term extends into 2028. The administration's argument is essentially that Mr Trump's Fed pick – whether it's Mr Hassett or someone else – needs a clear run at the job.
'Traditionally, the Fed chair also steps down as a governor,' Mr Bessent told Bloomberg TV on July 15. 'There's been a lot of talk of a shadow Fed chair causing confusion in advance of his or her nomination. And I can tell you, I think it'd be very confusing for the market for a former Fed chair to stay on also.' BLOOMBERG