Former President Donald Trump has delivered his strongest signal yet about who he intends to nominate as the next chair of the powerful Federal Reserve, with current National Economic Council Director Kevin Hassett emerging as the clear frontrunner.
A Public Endorsement at the White House
During a White House event on Tuesday celebrating a new savings initiative for newborns, Trump pointedly hinted at his preferred candidate for the top banking job. "I guess a potential Fed Chair is here too," Trump remarked, before adding, "I don’t know, are we allowed to say that? Thank you, Kevin." The comment, naming Hassett directly, was made with the economist standing nearby and sent immediate ripples through financial prediction markets.
This public nod followed a Cabinet meeting earlier the same day where Trump reiterated his fierce criticism of the current Fed Chairman, Jerome Powell, whom he appointed in 2018. Trump labelled Powell "an incompetent chairman of the Fed, a real dope" and repeated his long-standing demand for lower interest rates. He revealed his search for a replacement had narrowed, stating, "we have it down to one." A final decision is expected in early 2026, before Powell's term concludes in May of that year.
Markets React to the Leadership Hint
The immediate aftermath of Trump's comments saw a dramatic shift in online betting odds. On prediction market Kalshi, Hassett's perceived chances of securing the role surged from 66% to 83%. A similar jump was recorded on rival platform Polymarket, where his odds also soared to over 80%, reflecting market consensus that Hassett is now the overwhelming favourite.
The potential leadership change centres on a fundamental policy rift. The Federal Reserve, which manages a colossal $6.5 trillion portfolio and sets monetary policy, has repeatedly resisted Trump's pressure to cut interest rates more aggressively. While Federal law protects Fed governors from being removed over policy disputes, Trump's next appointment is widely expected to be someone more aligned with his economic vision.
Independence and the Future of US Monetary Policy
The Federal Reserve's independence is a cornerstone of its design, a principle reinforced by the Supreme Court. This means Trump cannot simply dismiss Chairman Powell before his term ends. The institution's primary roles include supervising financial firms, protecting consumers, and its most watched function: deciding interest rates that directly influence mortgage costs and borrowing across the economy.
By spotlighting Kevin Hassett, his trusted economic adviser, Trump is signalling a desire for a Fed leadership that would be more receptive to presidential influence on rate-setting. This prospective shift underscores the high-stakes battle over the direction of US monetary policy, with implications for global markets and the financial security of American households.
