• Kevin Hassett, a top candidate for Fed chair under President-elect Trump, stated Trump could advocate for sharp rate cuts, but the Fed's decision-making committee would independently reject them if not data-driven.
  • Trump favors candidates like Hassett or Kevin Warsh who support slashing the key rate from ~3.6% to 1% or lower, a stance few economists endorse, amid rising internal dissent at the Fed.
  • Markets price in a ~90% chance of a December 9-10, 2025 rate cut, but Fed signals have moderated expectations for 2025 cuts, with inflation risks from Trump's proposed tariffs and tax cuts complicating the outlook.

Kevin Hassett, a leading contender to chair the Federal Reserve under President-elect Trump, said in a December 2025 CBS News interview that Trump would be free to share opinions on Fed policy—such as pushing for aggressive interest rate cuts—but emphasized that the Fed's decision-making committee would retain its independence to reject such input if not backed by data. According to people familiar with the matter, Hassett made these remarks as Trump searches for a successor to Fed Chair Jerome Powell, whose term ends in May 2026, with Trump leaning toward candidates who align with his view of reducing the key rate from around 3.6% to 1% or lower.

Efforts to navigate this transition have hit a snag, as few economists support such drastic cuts, and internal dissent is rising within the Fed with Powell's influence waning. The Fed is widely expected to cut rates at its upcoming December 9-10, 2025 meeting, but officials are grappling with how to balance political pressures against economic fundamentals. "What institutional investors are really focused on is regulatory stability," one analyst noted, drawing parallels to other markets where policy shifts have sparked volatility. Without a clear consensus, the Fed could face heightened scrutiny over its autonomy.

Trump's proposed tariffs and tax cuts could fuel inflation, potentially pressuring the Fed to raise rates despite his preferences, a dynamic that has global markets anxious over U.S. policy shifts affecting investment flows. Current trends show markets pricing in a roughly 90% chance of a December rate cut, though recent Fed signals have moderated expectations for further cuts in 2025, according to sources close to the discussions. This situation revives Trump's first-term criticisms of Powell and the Fed, breaking decades of presidential restraint on public commentary traditionally aimed at preserving central bank independence, seen as crucial for controlling inflation through sometimes unpopular hikes.

Stakeholders like businesses and investors face uncertainty over future rate paths, which could delay borrowing or spending decisions; economists warn that erosion of Fed independence might worsen inflation, hitting consumers via higher prices. In a brief statement, Hassett reiterated that the committee's data-driven approach would prevail, but attempts to reach other candidates for comment were unsuccessful. The Fed's October minutes revealed that "several" officials opposed further cuts, straining Powell's consensus-building efforts as he prepares to depart, with parallel concerns emerging in other nations where central bank independence is under populist pressures.

Short-term, an incoming chair could push for lower rates, complicating Fed consensus and the timing of December cuts. Long-term, risks to Fed autonomy persist if Trump's views gain traction, though structural independence limits their success; experts predict the committee will reject unsubstantiated input. Analysts see a potential Warsh or Hassett appointment adding uncertainty without guaranteed policy shifts, as markets adjust to the evolving landscape. Correction: An earlier version misstated the exact market pricing for the December cut; it is approximately 90%, not 95%.