• Kevin Hassett, current National Economic Council Director, was considered for Federal Reserve Chair but passed over in favor of Kevin Warsh, with Trump citing Hassett's value in his White House role.
  • Trump announced on Friday that Kevin Warsh, a former Federal Reserve governor and bank executive, will be nominated to succeed Jerome Powell as Fed Chair when Powell's term expires in May 2026.
  • The nomination faces potential congressional opposition, with Republican Senator Thom Tillis and other GOP leaders vowing to block all Trump Fed chair nominees until a DOJ inquiry into Powell is resolved.

In a move that underscores the high-stakes interplay between monetary policy and political maneuvering, Kevin Hassett has accepted being passed over for the Federal Reserve Chair nomination, according to sources familiar with the matter. Trump revealed on Truth Social that Hassett, his current National Economic Council Director, was initially in the running but ultimately not selected because he is "doing such an outstanding job working with me and my team at the White House." Hassett stated he was content with remaining in his White House role, indicating no disappointment about the decision.

Instead, Trump announced on Friday that Kevin Warsh, a former Federal Reserve governor and bank executive, will be nominated to succeed Jerome Powell as Fed Chair when Powell's term expires in May 2026. Warsh previously served as an economic advisor to the George W. Bush administration and spent his early career at Morgan Stanley (MS). His selection suggests Trump is seeking a Fed chair more receptive to executive influence over interest rate decisions, a shift that could reshape monetary policy in the coming years.

Efforts to confirm Warsh have hit a snag, however, as the nomination faces potential congressional headwinds. Republican Senator Thom Tillis and other GOP leaders have stated they will oppose all Fed chair nominees from the Trump administration until the Department of Justice's inquiry into Jerome Powell is "fully and transparently resolved." This probe stems from grand jury subpoenas the Federal Reserve received in January, which raised alarm among politicians, economists, and business leaders. Without a deal to resolve this standoff, the nomination process could stall, injecting uncertainty into financial markets.

Warsh has recently aligned with Trump's push for monetary policy changes. In July, he told CNBC that "one of the reasons why the president, I think, is right to be pushing the Fed publicly is we need regime change in the conduct of policy," citing the Federal Reserve's earlier inflation miscalculation. This stance may appeal to Trump but could fuel tensions with lawmakers wary of political interference in the central bank's independence.

The market reaction to the announcement was muted, as Warsh had been the heavy favorite for the position. Analysts note that his experience and recent comments signal a potential shift toward more accommodative policies, though the political hurdles add a layer of complexity. Attempts to reach Hassett and Warsh for further comment were unsuccessful, but insiders suggest both are preparing for the upcoming confirmation battles. As the May 2026 deadline approaches, all eyes will be on how this nomination navigates the turbulent waters of Washington politics.