Trump "Top pick for next Fed chair is Kevin Warsh'… President should be involved in rate decisions" [Fed Watch]

Trump, "Fed chair should consult the president before rate decisions"

Prediction market reacted immediately… Warsh up, Hassett down

U.S. President Donald Trump said on the 12th (local time) that former Fed governor Kevin Warsh is at the top among candidates for the next chair of the U.S. central bank (Fed). The Wall Street Journal (WSJ) reported, however, that other candidates such as Kevin Hassett, chairman of the National Economic Council (NEC), are still being considered.

Trump said, "There is Kevin (Warsh) and Kevin (Hassett). Both are great," giving a positive assessment of both Warsh and Hassett. It is reported that his favorable view of Warsh grew after an interview with Warsh on the 10th.

Hassett, once considered a leading candidate in a Bloomberg report, has publicly maintained a general stance of "I would be willing to serve if nominated." Senator Elizabeth Warren of the Democrats expressed concern in an interview with CNBC, saying, "President Trump could appoint a 'puppet chair' who moves at his will."

Trump reiterated that the Fed chair should consult the president before making rate decisions.

He said, "It used to be common to consult with the president, but now it is not," adding, "It should be that way. I am a smart voice and it is right to listen."

Trump has continued conflicts with Jerome Powell, whom he nominated in 2017, throughout his term, repeatedly pressing that rate cuts have been too slow. The Fed cut its policy rate by 0.25 percentage points to a range of 3.5–3.75% as of the 10th, but Trump has argued this is still "not enough."

Trump also said Warsh's views on monetary policy are not very different from his own.

He said, "Warsh agrees with my view that rates should be lowered," adding, "Others I have mentioned are the same."

After the WSJ report, the candidate landscape shook even in prediction markets. Hassett's chance of being nominated fell from 71% to 62%, while Warsh rose to 36%.

Trump said, "I have a candidate I like but I want to be careful," and added, "When I nominated Powell I received a bad recommendation," criticizing former Treasury Secretary Steven Mnuchin, who had recommended Powell, several times. Currently, Treasury Secretary Scott Bessent is leading the vetting of the next chair candidates.

Trump has repeatedly signaled he would like to appoint Bessent as the next Fed chair, but Bessent has consistently expressed no interest in the position.

Other candidates currently mentioned include current Fed governors Christopher Waller and Michelle Bowman, and Rick Rieder, BlackRock's head of fixed-income. They are among the last remaining figures from the 11 final review candidates. Chair Powell's term ends in May next year. He was reappointed by President Biden.

New York=Correspondent Park Shin-young nyusos@hankyung.com