Why Kevin Hassett Is Winning the Fed Chair Race Before It Has Ended
Quick Summary
President Trump appears to favor Kevin Hassett for Federal Reserve chair, prioritizing loyalty and market credibility.
The search process is still under way, with finalists scheduled for interviews with Vice President JD Vance and senior White House staff beginning this week.
Hassett’s candidacy is supported by his loyalty to Trump and recent market reaction to his potential nomination.
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- President Trump appears to favor Kevin Hassett for Federal Reserve chair, prioritizing loyalty and market credibility.
Officially, the search for a new Federal Reserve chair is still under way. A handful of finalists are scheduled to sit down for interviews beginning this week with Vice President JD Vance and senior White House staff.
Unofficially, the process seems to be all but over, with President Trump appearing to favor longtime adviser Kevin Hassett. If Hassett does end up the nominee, it will be because he met Trump’s two key criteria: loyalty, and credibility with the markets.
“I know who I am going to pick,” Trump told reporters on Sunday. Asked if Hassett was the selection, Trump grinned but said little.
Treasury Secretary Scott Bessent has been running a methodical search since Labor Day, whittling an initial field of 11 candidates down to five: Hassett, currently director of the White House National Economic Council; former Fed governor Kevin Warsh; sitting Fed governors Christopher Waller and Michelle Bowman; and BlackRock executive Rick Rieder.
Warsh had been considered a front-runner along with Hassett this summer. People who have spoken to him recently came away with the impression he no longer sees himself that way.
Hassett and Warsh didn’t respond to requests for comment.
“Until an announcement is made by President Trump, discussion about Fed nominations is speculation,” said White House spokesman Kush Desai.
Hassett has said to White House and other administration officials that he wants the job and that he’s the best candidate for it, according to people familiar with the matter.
Hassett’s proximity to the president has paid dividends since other contenders haven’t had the same opportunity to prove their loyalty to Trump. He served as the chairman of the White House Council of Economic Advisers from 2017 to2019, then returned briefly as a senior adviser after the Covid pandemic hit in 2020. He became the NEC director when Trump returned to the White House in January.
Hassett passed another test last week when long-term interest rates declined following a report that he was the front-runner to be Fed chair. On Sunday, Hassett pointed to that as evidence that he could deliver the lower rates Trump has demanded without sacrificing credibility on inflation.
“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. That’s what we saw in the market response to the rumor about me,” Hassett said on CBS.
The choice of a successor to Fed chair Jerome Powell, who steps down in May, arguably the most consequential personnel decision of Trump’s second term, has become a spectacle: a monthslong, public audition in which candidates jockeyed for attention on cable television between several interviews with Bessent.
The finalists have already met with Bessent. People familiar with the matter said they were to meet with Vance and other White House staff starting this week, and after that with Trump. Bessent has said Trump could announce a nominee before Christmas.
Although Trump said he’s made a decision and all signs point to Hassett as being his preferred choice, people following the process note he could change his mind.
Trump as recently as last week has been speaking with allies about who should be the next Fed chair, according to people with direct knowledge of the matter. Trump has pushed allies to lay out their case for either Hassett or Warsh, this person said.
Some have told Trump that Warsh doesn’t have the close professional relationship Hassett has with the president, while noting that if he picks Hassett, he’ll lose him from the NEC, one of the people said.
Another person who has spoken to Trump about the decision said Bessent remains the only candidate who could derail Hassett’s Fed coronation at this stage. Bessent has ruled himself out of the running, privately and publicly. Yet the president told allies last week that he has such admiration for Bessent, he still likes thinking of him as a potential candidate for Fed chair, according to another person with direct knowledge of the matter.
In addition to his loyalty to Trump, Hassett’s candidacy is helped by the fact he is a published Ph.D. economist who once worked at the Fed as a staff economist. He has solid conservative credentials and was confirmed by a solid bipartisan majority in the Senate to the CEA job in 2017.
Nonetheless, Hassett’s candidacy has generated misgivings among some former colleagues who question whether he has the temperament for the job and fortitude to stand up to Trump if needed. Some who helped rally congressional support for his CEA candidacy have since been troubled by his public attacks on the Fed.
The Fed chair succession is shaping up as one of the most unusual in decades. Beginning when Alan Greenspan succeeded Paul Volcker in 1987, every incoming Fed chair has pledged continuity to promote market stability. This time, candidates have had to distance themselves from Powell. Eight years ago, Trump picked Powell, who at the time was a Fed governor, to serve as chair, but he quickly soured on his choice.
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While Hassett staunchly defended the importance of an independent central bank during Trump’s first term, he has joined Trump this year in sharply criticizing the Fed and Powell. Over the summer and again last month, he has accused the Fed of being partisan for not cutting interest rates more aggressively, a charge that almost all of the central bank’s policymakers reject.
Powell’s willingness to resist Trump’s demands burnished his standing with economists and investors who prize the Fed’s independence. Hassett, having spent months publicly attacking his future colleagues while auditioning for the job, would have to prove his credibility with those same colleagues and to markets while preserving the loyalty that got him the job.
The Fed has cut interest rates at its past two meetings, but some officials have resisted making additional cuts, including at a meeting next week, as they balance competing worries about a softening labor market and stickier inflation.
Write to Nick Timiraos at Nick.Timiraos@wsj.com and Brian Schwartz at brian.schwartz@wsj.com
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