Trump’s Choice for the Fed Sparks Discussion on Autonomy Versus Political Influence

Trump’s Likely Fed Chair Pick: Kevin Hassett Emerges as Frontrunner

Speculation is mounting that Donald Trump will soon announce Kevin Hassett as his choice for the next Federal Reserve chair, with predictions suggesting an official decision could arrive before Christmas. According to Kalshi, Hassett currently holds an 82% probability of securing the nomination.

Although the White House has yet to formally confirm Hassett as the nominee, Trump has dropped several public hints—stating he already knows his selection and commending Hassett’s economic expertise—cementing Hassett’s status as the leading candidate. Should he be appointed, Hassett would be the first close Trump associate to head the central bank, potentially ushering in a new era of monetary policy that favors aggressive interest rate reductions, in line with Trump’s repeated calls for lower borrowing costs.

Debate Over Central Bank Independence

The prospect of Hassett’s nomination has ignited concerns about the Federal Reserve’s autonomy, a cornerstone of its credibility. Trump has previously criticized current Fed Chair Jerome Powell for not acting swiftly enough to lower rates. Hassett’s public support for the administration’s push for rate cuts—arguing that “now is the time” to ease monetary policy—has heightened worries among economists about the Fed’s ability to remain independent from political influence.

Other contenders, including current Fed Governor Christopher Waller and former Governor Kevin Warsh, remain in consideration. However, Hassett’s close relationship with Trump and his bipartisan confirmation to the Council of Economic Advisers in 2017 give him a distinct advantage.

Potential Impact on Monetary Policy

If Hassett takes the helm, the Federal Open Market Committee (FOMC) could face increased pressure to lower interest rates, especially as the Trump administration continues to advocate for economic stimulus through cheaper borrowing. Financial markets have already factored in an 87.6% chance of a rate cut at the Fed’s December meeting, with expectations of further easing in 2026.

Despite these market expectations, advocates for Fed independence caution that Trump’s influence—highlighted by his threats to dismiss Powell and Lisa Cook—could compromise the central bank’s ability to make decisions based on economic data rather than political considerations.

Accelerating the Nomination Process

The search for the next Fed chair is moving quickly. Treasury Secretary Scott Bessent has indicated that an announcement could come as soon as December 25, with Hassett potentially beginning his term in May 2026. This timeline fits with Trump’s broader strategy to reshape the central bank ahead of a possible second term, aiming to place trusted allies on the FOMC to advance his policy agenda.

Fed Officials Remain Divided

Within the Fed, opinions are split. Some policymakers support rate cuts to prevent a slowdown in the job market, while others warn against loosening policy too soon amid ongoing inflationary pressures. Should Hassett be appointed, the central bank may lean further toward dovish policies, but his ability to enact significant changes will depend on the makeup of the FOMC and the prevailing economic conditions.

As the deadline for a decision approaches, both investors and economists are watching closely to see if Trump’s favored candidate will soon be officially named as the next leader of the Federal Reserve.