• Kevin Hassett, a top Trump economic adviser, is poised to replace Jerome Powell as Federal Reserve chair, with a late-December announcement expected.
  • Markets are divided over Hassett's potential appointment, with supporters praising his inflation-fighting credentials and critics warning of risks to Fed independence and higher long-term yields.
  • Hassett has publicly advocated for immediate rate cuts, aligning with Trump's push for lower rates, which could trigger volatility in bond markets if perceived as politically driven.

A Loyalist in Line for the Fed

Kevin Hassett, director of the National Economic Council and a close economic adviser to Donald Trump, is publicly signaling he would accept whatever role Trump chooses for him, as his name has rapidly moved to the top of the shortlist to replace Jerome Powell as Federal Reserve chair. According to people familiar with the matter, Hassett is widely reported as the front-runner, with prediction markets and insiders pointing to him as "the name to beat." Trump has hinted he "knows who he's going to pick," and the White House is aiming for a late-December announcement, setting the stage for a pivotal shift in U.S. monetary policy.

In recent media appearances, Trump has called Hassett a "potential Fed chair," and Hassett has responded by stressing he is focused on his NEC job and that the president will decide among several candidates. Coverage emphasizes Hassett's reputation as a strong Trump loyalist who frequently defends Trump's economic narrative on TV, including arguing that inflation has "come way down" despite data showing several months of rising CPI. Economists and Fed watchers are sharply divided: supporters praise him as a "hard money guy" who understands the Fed's role in controlling inflation, while critics worry he would undermine Fed independence to deliver the aggressive rate cuts Trump wants.

Economic and Political Crosscurrents

Hassett has argued publicly that rates should be cut now, saying that if he ran the Fed he "would be cutting rates right now" because "the data suggests that we should." Trump has repeatedly pressured the Fed for "dramatically lower rates," and analysts note the next chair will be under intense pressure to deliver deeper cuts than current Fed officials are signaling. Deutsche Bank economists warn that if markets believe the new chair's "primary objective" is to implement Trump's low-rate agenda rather than control inflation, it could erode confidence and risk higher long-term yields if investors doubt the Fed's independence. Bond-market commentators cited by Fortune note that yields near 4% look "exceptionally low" given above-target inflation and large deficits, and that a loss of faith in Fed independence could trigger a "violent" repricing and soaring rates.

Politically, Hassett currently runs the National Economic Council, putting him at the center of Trump's second-term economic agenda, including corporate tax cuts and industrial policy. He has publicly echoed Trump's attacks on the Fed and on official statistics, accusing Fed officials of putting "politics ahead of their mandate" and suggesting partisan bias in jobs data from the Bureau of Labor Statistics. Hassett even floated a legal rationale for Trump to fire Powell early, arguing that alleged cost overruns on the Fed's headquarters renovation could constitute "cause" for removal. Politico notes that both Hassett and alternative contender Christopher Waller would face the challenge of balancing White House political demands with the Fed's mandate, but that Hassett's especially close relationship with Trump intensifies concerns about White House influence over monetary policy.

Market Implications and Future Outlook

Financial markets are highly sensitive to any sign the Fed might be steered toward political goals; a perceived loyalist at the helm could increase risk premia and volatility. Households and borrowers might see short-term benefits from lower rates reducing borrowing costs and supporting growth, but if inflation re-accelerates, real wages and savings could be hurt. This trade-off is central to the debate around Hassett. Economists and former colleagues quoted by Fortune express concern that Hassett's recent behavior shows a willingness to "sacrifice institutional independence—and objective truth—to please his boss."

In the short term, markets will watch for the formal nomination and Senate reaction; hearings would likely focus on Hassett's views on inflation, rate-cut timing, and his commitment to Fed independence. Bond and currency markets may react immediately to any indication that a Hassett-led Fed would accelerate rate cuts beyond what current data justify. Long-term, if confirmed and if he delivers rapid, politically driven rate cuts, analysts warn of a higher risk that inflation expectations de-anchor, forcing sharper tightening later. If, instead, he moves "towards the center" of the FOMC and builds consensus for only moderately faster easing, Deutsche Bank suggests he could preserve some credibility while still modestly easing policy.

Supporters expect Hassett to be a "hard money" Fed chair who ultimately prioritizes inflation control despite his loyalty to Trump. Skeptics highlight his recent pattern of defending contested or inaccurate economic claims and see a meaningful risk that the Fed's perceived independence will erode under his leadership. Another leading candidate is Fed Governor Christopher Waller, who is also dovish on rates but is seen by "Wall Street investors and central bank insiders" as more traditionally credible and less personally close to Trump. The broader pattern of presidents pressuring central banks for easier policy has appeared in other countries, but the scale and publicity of Trump's pressure on the Fed—and the possibility of appointing a highly loyal chair—are drawing especially intense scrutiny from global investors and central banking observers.

Correction: An earlier version of this article misstated the timing of the White House announcement; it is aimed for late December, not early January.