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Author: Xiao Yanyan, Jin Shi Data
On the surface, the selection of the new Fed chairman is still ongoing.A handful of finalists are scheduled to begin interviews with Vice President Vance and senior White House staff this week.
But in reality, the process appears to be nearing its end, with Trump appearing to be leaning toward his longtime adviser, Kevin Hassett.If Hassett ultimately wins the nomination, it will be because he meets two key Trump criteria: loyalty, and credibility in the marketplace.
“I know who I’m picking,” Trump told reporters on Sunday.When asked if Hassett was his pick, Trump smiled but said little.
Treasury Secretary Bessent has been leading a methodical search since Labor Day, narrowing the initial field of 11 candidates to five: current White House National Economic Council Director Hassett, former Fed Governor Kevin Warsh, current Fed Governors Waller and Bowman, and BlackRock executive Rick Rieder.
Wash was considered a front-runner this summer along with Hassett.But the impression from those who have spoken to Wash recently is that he no longer views his situation that way.
Hassett and Wash did not respond to requests for comment.
White House spokesman Kush Desai said: “Discussions about the Fed nomination are speculation until President Trump makes a formal announcement.”
Hassett told the White House and other administration officials that he was eager for the position and that he was the best candidate, according to people familiar with the matter.
Hassett’s close relationship with Trump has paid off because other contenders haven’t had the same opportunity to prove their loyalty to Trump.He served as chairman of the White House Council of Economic Advisers from 2017 to 2019, and then briefly returned as a senior adviser after the outbreak of the new crown epidemic in 2020.When Trump returned to the White House in January this year, he served as director of the National Economic Council.
last week,Hassett passed another test: Long-term interest rates fell after a report named him the frontrunner for Fed chairmanship.Hassett took that as evidence on Sunday that he could meet Trump’s demands for lower interest rates without sacrificing credibility on inflation.
“I think the American people can expect President Trump to pick someone who can help them get cheaper car loans, make it easier to get mortgages at lower interest rates. That’s what we’re seeing in the market’s reaction to the rumors about me,” Hassett said on CBS.
Choosing a successor to Powell, who will step down next May, can be said to beThe most influential personnel decisions of Trump’s second term, has become a public spectacle: a months-long campaign in the public eye, with candidates vying for attention on TV shows in between interviews with Bessant.
The final candidate has met with Bessant.People familiar with the matter said they will begin meeting with Vance and other White House staff this week before meeting with Trump.Bessant has said Trump could announce his nominee before Christmas.
While Trump says he has made a decision and all signs point to Hassett as his first choice, those following the process note thatHe may still change his mind.
As recently as last week, Trump was discussing with allies who should be the next Fed chair, according to people with direct knowledge of the matter.Trump has urged allies to make the case for supporting Hassett or Warsh, this person said.
One of the people said some people told Trump that Warsh did not have as close a professional relationship with him as Hassett, while also noting that if Hassett was selected, he would lose a capable person as director of the National Economic Council.
Another person who discussed the decision with Trump said:Bessant remains the only candidate who might stand in the way of Hassett’s coronation as Fed chairman.Bessant has privately and publicly ruled out his own candidacy.However, Trump told allies last week that he admired Bessant and still liked him as a potential Fed chairman, according to another person with direct knowledge.
Beyond loyalty to Trump,Hassett’s candidacy also benefits from the fact that he is an economist with a Ph.D., has published books, and has served as a staff economist at the Federal Reserve.He has solid conservative credentials and was confirmed in the Senate in 2017 as chairman of the Council of Economic Advisers with broad bipartisan support.
Despite thisHassett’s candidacy has raised doubts among some former colleagues, who question whether he has the poise needed for the job and the courage to withstand Trump’s pressure if necessary.Some who had helped him win support in Congress for the nomination to chair the Council of Economic Advisers later became troubled by his public attacks on the Fed.
The succession process for the Fed chair is shaping up to be one of the most unusual in decades.Since Alan Greenspan succeeded Paul Volcker in 1987, every new Fed chair has pledged to maintain policy continuity to promote market stability.But this time,Candidates have to distance themselves from Powell’s policies.Eight years ago, Trump chose Powell, then a Fed governor, to be chairman, but he quickly grew dissatisfied with his choice.
Although Hassett staunchly defended the importance of central bank independence during Trump’s first term, this year he has joined Trump in sharply criticizing the Fed and Powell.Over the summer and again last month, he repeatedly accused the Fed of being partisan for not cutting rates more aggressively, a charge that was rebutted by nearly every policymaker at the central bank.
Powell’s willingness to resist Trump’s demands has boosted his standing among economists and investors who value the Fed’s independence.Hassett, who spent months publicly bashing his future colleagues during his bid for the job, will have to prove his credibility to those colleagues and the market while maintaining the loyalty that earned him the job.
The Fed has cut interest rates at each of its past two meetings, but some officials have expressed reservations about further cuts, including at next week’s meeting, as they weigh competing concerns about a weak labor market and stickier inflation.
The above content comes from Nick Timiraos, a famous reporter from the Wall Street Journal and known as the “Fed’s mouthpiece”
