All candidates for next Fed chair are 'doves'… Market: "Hassett top choice"

Five candidates announced… Trump: "Will choose before year-end"

Hassett, who serves as White House economic aide

Considered a leading contender on betting sites

Could switch to nominating Besent at the last minute

Trump confidants hold a majority at the Fed

The Donald Trump administration has narrowed the list of candidates to succeed Jerome Powell as chair of the U.S. central bank (Fed) to five people. Since President Trump has strongly urged the Fed to cut its policy rate, all of the candidates are filled with doves (favoring monetary easing).

◇"Two 'Kevins' are frontrunners" outlook

According to The Wall Street Journal (WSJ), Scott Bessent, U.S. Treasury Secretary, revealed the list of candidates for the next Fed chair to reporters aboard the presidential plane on the 27th (local time). The five are Kevin Hassett, chairman of the White House National Economic Council (NEC); Kevin Warsh, former Fed governor; Christopher Waller, Fed governor; Michelle Bowman, Fed governor (also vice chairman for bank supervision); and Rick Rieder, BlackRock chief investment officer (CIO) for fixed income. Secretary Bessent said he plans to hold second interviews with them next month and deliver the candidate list to President Trump immediately after Thanksgiving (November 27). At the same event, President Trump said he "expects to choose a candidate before the end of the year."

Foreign outlets forecast that Chairman Hassett is the most likely among the five candidates. The WSJ reported that Chairman Hassett, who is close to President Trump, and former Governor Warsh are seen as leading candidates, and Axios, citing betting site Polymarket data, said the projection that Chairman Hassett is the likely next chair has the strongest lead at 36%. He was followed by Governor Waller (23%), former Governor Warsh (16%), CIO Rieder (9%), and Governor Bowman (3%).

Chairman Hassett is President Trump's closest economic aide. In the first term he served as chairman of the Council of Economic Advisers (CEA), and after officially taking office as NEC chairman in January, he led the president's tariff war and represented his position. During Trump's presidency, he served as senior economic adviser at a private equity firm led by the president's son-in-law Jared Kushner. Earlier this year he publicly criticized the Fed for being reluctant to cut rates. Axios said, "President Trump has repeatedly expressed dissatisfaction that Chair Powell does not follow White House signals," and "in this sense Chairman Hassett is an attractive choice for President Trump."

The other Kevin, former Governor Warsh, was nominated by President George W. Bush and served as a Fed governor from 2006 to 2011. He played a key role in the Fed's response during the 2008 global financial crisis by leveraging his network on Wall Street. In 2017 he was mentioned as a candidate for Fed chair alongside Chair Powell in the Trump administration.

Former Governor Warsh is traditionally a hawkish figure, emphasizing inflation control and criticizing large-scale quantitative easing by the Fed. But Bloomberg News explained that he recently shifted to a more open stance on rate cuts, arguing that if the Fed sharply reduces its holdings of assets, there will be greater room to cut rates.

◇Many dove-leaning candidates

The remaining candidates clearly show dovish views. Among sitting Fed governors, Governor Waller and Governor Bowman, who are pro-Trump, were nominated during President Trump's first term. They dissented at the July meeting of the Federal Open Market Committee (FOMC), arguing for a 0.25% point cut instead of keeping the policy rate unchanged.

CIO Rieder also demanded a 'big cut' from the Fed. In a September CNBC interview he said, "Given economic conditions, the Fed should implement a 0.5% point rate cut." He is also said to have left a strong impression on Secretary Bessent during the chair interviews conducted by Secretary Bessent. Bloomberg reported, "CIO Rieder is highly regarded for his deep knowledge of both financial markets and macroeconomics and for his experience managing large teams."

Some analysts say it is too early to predict President Trump's decision. On the day President Trump said, "Secretary Bessent is not included among the (Fed governor) candidates," Bessent's aides said, "If President Trump is not satisfied with the other candidates, Secretary Bessent could eventually emerge."

There are concerns that naming a successor too early before Chair Powell's term ends could create unforeseen conflicts. Traditionally, the White House announces the next Fed chair 3–4 months before the incumbent chair's term expires. But if, as President Trump said, an early announcement is made at year-end, investors could move preemptively depending on the new Fed chair's leanings, affecting the market. The WSJ also pointed out, "A successor could reveal differences with the current chair and board or, conversely, defend Fed decisions and then risk displeasing the president."

Hankyung reporter hankyung@hankyung.com