The White House wants to accelerate aid to the Federal Reserve (Fed). Treasury Secretary Scott Bessent assured on Tuesday that he expects US President Donald Trump to make a final decision before Christmas on the new central bank president, who will replace the reviled Jerome Powell.
“I think there’s a good chance the president will make an announcement before Christmas,” said the economist, who has followed tariff deals. “But it’s the president’s prerogative, both before the holidays and on New Year’s Eve. I think things are going very well,” he said in an interview with CNBC.
Bessent is in charge of looking for a successor for the current Fed chair. He has been interviewing candidates for several weeks. Although he assured that the selection process is not yet over, there is one figure who is starting to stand out from the others.
According to Bloomberg, Kevin Hassett, director of the White House National Economic Council, is emerging as the favorite to succeed the current Fed chair, Jerome Powell. “He is seen by President Donald Trump’s advisers and allies as the favorite to be the next Federal Reserve chairman,” the agency says after seeking the opinion of several people familiar with the matter.
Trump has been waging a ferocious campaign for months against the current president of the institution, whom he has harassed and insulted. He accuses him of being late in cutting rates. It asks him to be more aggressive to ease the financing conditions of the economy. The Republican seeks to undermine the independence of the central bank. A strategy that has sparked several warnings from international organizations and numerous economists due to the risk to the country’s economic stability. Trump has repeatedly signaled that he would like to fire Powell, but admits that he cannot. However, the mandate of the current president of the body that decides the direction of monetary policy expires in May and the occupant of the Oval Office wants to speed up his replacement.
Hassett fits the profile the Queens-born president likes. He heads the White House economic office and is one of his most trusted men. He knows the Fed. He worked as a senior economist at the central bank. He has also advised several Republican candidates: in 2000 he advised John McCain and four years later participated in the presidential campaigns of George W. Bush and Mitt Romney. He has extensive experience at conservative and liberal think tanks and research centers such as the Hoover Institution and the American Enterprise Institute.
But above all he has left signals that he prefers to please Trump rather than defend the institution’s independence. A week ago he said in an interview with Bloomberg: “I think the president thinks rates could be much lower, and I agree with him.”
Asked if he is ready to chair the Federal Reserve, Hasset said: “The reason I may be ready to start working right away is that I spent five years working at the Federal Reserve and I know many of the economists who now lead the divisions.”
The decision on the next Fed chair is important. Before Powell takes over, the institution will have to decide in May whether to deepen the rate cut or pause it. The Federal Open Market Committee (FOMC), the body that decides the price of money, is deeply divided. Something unusual in the story. Some committee members support aggressive cuts, while others are even reconsidering possible rate hikes. Hassett is seen as someone who would like to continue the president’s strategy of cutting interest rates. A week ago, Hasset said in an interview with Fox News: (if I chaired the Fed) “I would cut rates now, because the data suggests we should.”
Trump has hinted that he is close to the nomination. Last week, when asked about his candidate, he said: “I think I know who he is.” The other leading candidates in the Fed chair race are former Federal Reserve official Kevin Warsh and current central bank governor Christopher Waller.
Treasury Secretary Scott Bessent, who is leading the selection process on Trump’s behalf, said he envisions a different role for the Fed compared to the dominant position it has had over the economy and financial markets since the financial crisis. “I think we need to simplify things,” he said. “I think it’s time for the Federal Reserve to step back into the background, as it did in the past, to calm things down and work for the American people.”
