• Kevin Hassett, Director of the National Economic Council, is seen as the leading candidate to be the next Federal Reserve Chair.
  • An announcement is expected before Christmas, with the selection process described as proceeding very smoothly.
  • Markets anticipate a shift toward less tight monetary policy and potential interest rate cuts under new leadership.

Kevin Hassett has emerged as the frontrunner to become the next Chair of the Federal Reserve, with President Trump expected to make a final decision before Christmas, according to people familiar with the matter. The selection process, led by Treasury Secretary Scott Bessent, has moved into second-round interviews and is proceeding very smoothly, one source indicated.

Hassett, who currently serves as Director of the National Economic Council, is among five finalists being considered for the role. The other candidates include former Fed Governor Kevin Warsh, current Fed Governors Christopher Waller and Michelle Bowman, and BlackRock's Chief Investment Officer Rick Rieder. The shortlist represents a mix of established Fed insiders and outside voices that could reshape monetary policy.

The potential appointment signals a significant shift in the Fed's direction, with markets already pricing in expectations for less restrictive monetary policy and potential rate cuts. This would mark a departure from current Chair Jerome Powell's approach, which has emphasized data-dependent decision-making amid persistent inflation concerns.

Hassett's close involvement in shaping economic policy during Trump's second administration, including his defense of tariff threats, has positioned him as a candidate likely to align the central bank more closely with the White House's economic agenda. This has sparked debate among economists and market participants about the potential implications for Fed independence.

Efforts to reach representatives for Hassett and the Treasury Department for comment were unsuccessful late Tuesday. The White House press office did not immediately respond to inquiries about the timeline for an announcement.

Some experts have expressed concerns that Hassett may lack the independence traditionally expected from a Fed chair, potentially making the institution more susceptible to political pressure. The debate comes as some within Trump's circle have called for the Fed to simplify its authority and reduce the frequency of its public communications, which could fundamentally alter how the central bank guides markets.

*Correction: An earlier version of this article misstated the number of finalists; there are five candidates under consideration, not four.