President Donald Trump has dropped a bombshell by confirming he’s picked the next Federal Reserve chair, though he’s playing coy about the name.
Newsmax reported that Trump’s announcement has set markets abuzz with anticipation, as White House adviser Kevin Hassett emerges as the rumored front-runner, stirring both excitement and concern about the Fed’s storied independence.
While flying from Florida to Joint Base Andrews, Trump teased reporters with a cryptic, “I know who I am going to pick, yeah,” leaving everyone guessing. When pressed on whether Hassett is the chosen one, Trump smirked, “I’m not telling you, we’ll be announcing it,” keeping the suspense alive.
Treasury Secretary Scott Bessent hinted the big reveal could come before Christmas, and shortly after, Bloomberg pegged Hassett as the leading contender, with betting odds soaring past 50%.
Hassett, a conservative economist known for co-authoring “Dow 36,000,” has downplayed the chatter in recent CBS and Fox News interviews, though he’s clearly enjoying the spotlight.
If nominated this month to replace current Fed Chair Jerome Powell, whose term ends in May, Hassett could linger as a “shadow chair” for nearly five months, per analyst Mike Dolan.
Investors are already bracing for potential volatility during this overlap, as any stray comment from the incoming chair could jolt markets still adjusting to Powell’s policies.
The timing of Trump’s nomination shortens this awkward transition but doesn’t erase it, leaving room for uncertainty as risk premiums, yield curves, and inflation expectations shift.
Hassett himself noted the markets’ upbeat reaction to Trump’s looming decision, saying, “Once it became clear that the president’s getting closer to making a decision, the markets really celebrated — interest rates went down, we had one of our best Treasury auctions ever."
That’s all well and good, but let’s not pop the champagne just yet—celebrations aside, a Fed increasingly stacked with Trump appointees like Stephen Miran, Christopher Waller, and Michelle Bowman raises eyebrows about White House overreach.
A pending legal challenge involving Governor Lisa Cook could even hand Trump a 5-2 board majority, amplifying fears that the Fed’s autonomy might be more myth than reality soon.
Hassett hasn’t been shy lately, pushing for deeper rate cuts, dismissing tariff-driven inflation as a fleeting issue, and even floating 50-year mortgages—ideas that could clash with Powell’s cautious stance.
With Trump’s team, including Miran, advocating for rate reductions of 2-3 percentage points, and Waller and Bowman softening their hawkish tones, markets are wrestling with the fallout of such aggressive moves while inflation hovers above target.
If Hassett steps into the role, every word he utters will be dissected for clues on how far he’ll stray from the current path, especially as the dollar already shows signs of weakness.
