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U.S. President Donald Trump indicated Thursday that he will likely announce his pick to lead the Federal Reserve early next year, with his chief economic adviser Kevin Hassett emerging as the frontrunner to replace Jerome Powell when the current chair’s term expires in May 2026.
Speaking at a Cabinet meeting, Trump stated that the list of candidates had been narrowed down to one. Later that day, during a White House event, he singled out Hassett in front of reporters, calling him a "respected person" and referring to him as a "potential Fed chair."
While Trump stopped short of formally confirming the nomination, his remarks strongly suggested Hassett is the likely choice.
Hassett, 63, currently serves as director of the National Economic Council, advising the president on trade, tax, and monetary policy. During Trump’s first term, he also chaired the Council of Economic Advisers, a body focused on research and economic analysis.
An advocate of lower interest rates and protectionist trade policies, Hassett has publicly supported Trump’s economic vision, including broad import tariffs and repeated calls for the Fed to ease monetary conditions.
While he has not used the combative language Trump has directed at Powell, he has criticized the central bank’s hesitation to cut rates further.
Trump, who nominated Powell during his first term but later expressed regret over the choice, has long argued for deeper rate cuts to support growth.
He reiterated this stance on Tuesday, referring to Powell as a "stubborn ox" who, in Trump’s view, has failed to act decisively to lower borrowing costs.
The Fed delivered its first rate cut in September with a 25-basis-point reduction, followed by another of the same size in October, bringing the benchmark rate down to 3.75%–4.00%. Markets are now nearly fully pricing in a third 25-basis-point cut in December; nevertheless, Trump and his allies have viewed the pace of easing as insufficient.
Treasury Secretary Scott Bessent, leading the selection process, had previously confirmed a shortlist of five candidates: Hassett, current Fed Vice Chair for Supervision Michelle Bowman, Fed Board Member Christopher Waller, former Governor Kevin Warsh, and Rick Rieder, head of global fixed income at BlackRock.
All are known advocates of easier monetary policy, aligning with Trump’s preference for a Fed chair who favors lower interest rates. However, Hassett’s proximity to the president appears to have given him an edge. He also maintains a frequent media presence, often appearing on major networks to promote Trump’s economic policies.
Should Hassett be formally nominated, he will face a confirmation process in a Republican-controlled Senate. Observers expect questions about his ability to uphold the Fed’s independence and manage inflation risks, especially given the central bank’s 2% inflation target and the current rate hovering near 3%.
Even after his term as chair ends, Powell could remain on the Fed’s board as a governor. His presence, alongside Biden-appointed board members and vocal regional bank presidents who have opposed further easing, may complicate Trump’s efforts to reshape monetary policy.
One complication could arise if Powell chooses not to vacate his board seat. In that scenario, Trump’s appointees, such as Stephen Miran, a proponent of deeper rate cuts, might not find space on the board unless a sitting member resigns or is removed. Legal challenges to Trump’s attempt to unseat Governor Lisa Cook are currently before the Supreme Court.
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