"Kevin Hassett Likely to Be Next Fed Chair"... Also Seen as Lacking Resolve

Bessent, U.S. Treasury: "Trump expected to announce before Christmas"

10-year U.S. Treasury yield briefly fell below 4%

Kevin Hassett, chairman of the White House National Economic Council, is emerging as a leading candidate for the next chair of the Board of Governors of the Federal Reserve, succeeding Jerome Powell, among President Trump and his close aides. As Hassett, who favors rate cuts, became the frontrunner, U.S. Treasury yields briefly fell below 4% that day. This suggests growing expectations that the Federal Reserve's interest-rate policy will tilt dovish after next year. On the other hand, many assessments say that unlike Powell, Hassett lacks resolve, raising renewed concerns about the Fed's independence.

On the 26th (local time), Bloomberg, citing sources, reported that President Trump would place Hassett, a close aide he knows well and trusts, at the central bank. He is regarded as someone who would apply the president's rate-cut strategy to the Fed, which Trump wants to control. However, Trump may change the decision until the final nomination.

Hassett said in an interview with Fox News that he would answer "yes" if offered the Fed chair position.

The U.S. president's nominations for the Fed chair and governors are the most direct means to influence the central bank. President Trump nominated the current chair, Jerome Powell, during his first term. However, when Powell did not cut rates at the pace Trump wanted, he later regretted the nomination and criticized him.

Hassett is believed to share views with President Trump on economic policy, including further rate cuts. In an interview with Fox News on the 20th, he said that if he were Fed chair he would "cut rates immediately." He also criticized the Fed for losing control over inflation after the pandemic.

Treasury Secretary Scott Bessent said in an interview with CNBC the day before that President Trump is likely to nominate the next Fed chair before the Christmas holiday on December 25.

In September, President Trump named Hassett, former Fed governor Kevin Warsh, and current Fed governor Christopher Waller as his three candidates for chair.

According to Bloomberg, Sean Spicer, who served as White House press secretary during Trump's first term, emphasized that "President Trump has long understood the importance of placing people in key positions who understand his direction and priorities." Therefore, "it is unimaginable to appoint someone with whom he does not have a personally close relationship as Powell's successor," he said.

However, there are also opinions questioning whether Hassett has the resolve to preserve the central bank's independence.

Neil Dutta of Renaissance Macro Research predicted that Hassett may have difficulty leading Fed members to back his views. He said Hassett "seems like someone who would be most easily bullied by Trump, unlike Bessent." He meant that it is doubtful whether Hassett would be able to protect the Fed's independence, as Powell did despite being appointed by Trump and resisting his demands for rate cuts.

The next chair is likely to be nominated as a Fed governor for a 14-year term starting on February 1. The governor whose term expires at that time is Steven Myron, who took leave from his position as chairman of the White House Council of Economic Advisers to be seconded to the Fed. Powell's term as Fed chair ends in May 2026, but his term as governor remains for two more years. Powell has not yet disclosed whether he intends to step down from the Board when his term as chair expires.

President Trump has continued to attack the Fed. He has threatened to remove Chair Powell for being slow to cut rates and is pursuing legal action related to the removal of Governor Lisa Cook.

The Fed kept rates on hold all year amid concerns about tariffs and price pressures, but as employment slowed, it cut the policy rate by 0.25%p in September and October. Views among governors on inflation and labor market prospects diverged, making a rate cut in December unlikely, but recent sharp deteriorations in employment and consumer sentiment have increased the possibility of rate cuts.

Kim Jeong-a, contributing reporter kja@hankyung.com