• President Trump has decided on his pick for the next Federal Reserve chair, with an announcement expected early in 2026.
  • Kevin Hassett, former Chair of the Council of Economic Advisers, is the overwhelming favorite in prediction markets, holding roughly 77-80% odds.
  • The selection process occurs amid tensions over interest rate policy, raising questions about the central bank's future independence.

President Trump stated on Sunday that he has made his decision on who will lead the Federal Reserve next, telling reporters, "I know who I am going to pick, yeah. We'll be announcing it" early next year. The announcement, expected in early 2026, sets the stage for a pivotal transition at the world's most influential central bank as current Chair Jerome Powell's term concludes in May.

Behind the scenes, the process has been narrowing for weeks. Treasury Secretary Scott Bessent finalized a shortlist of five candidates after conducting interviews since Labor Day and submitted it to the president, according to people familiar with the matter. While the final list remains confidential, the front-runner has become unmistakably clear.

Prediction markets on Monday showed Kevin Hassett, the 63-year-old Director of the Trump White House's National Economic Council, with approximately a 77-80% chance of securing the nomination. This marks a dramatic surge from just last Wednesday, when his odds stood around 54%. When asked about the possibility by CBS News, Hassett struck a measured tone. "I'm really honored to be amongst a group of really great candidates," he said, adding that if asked by the president, "then of course I'll do it."

Hassett, who holds a doctorate from the University of Pennsylvania and previously chaired the Council of Economic Advisers during Trump's first term, is seen as closely aligned with the president's economic views. Other names in the mix include current Fed Governor Christopher Waller, with around 6-7% odds, and former Fed Governor Kevin Warsh, positioned at roughly 11%.

The looming appointment arrives at a moment of significant friction between the administration and the central bank. Trump has repeatedly called for the Fed to cut interest rates, arguing that inflation has eased. Hassett's public alignment with this stance is precisely what has some economists and market watchers concerned. Analysts at Deutsche Bank have warned that a chair selected from outside the central bank, particularly one perceived as politically close to the president, could struggle to convince the policy-setting Federal Open Market Committee to move on rates if it fuels doubts about the Fed's cherished independence.

Market reaction to the news of an imminent decision was immediately positive, with interest rates declining and a successful Treasury auction following Trump's comments. The role is critically important for an economy where affordability pressures continue to mount; the Fed's decisions directly influence mortgage costs, credit card rates, and car loans. Trump campaigned heavily on restoring economic affordability, making his choice for Fed chair a cornerstone of his second-term agenda.

Efforts to reach a spokesperson for Secretary Bessent for comment on the shortlist were unsuccessful. As the administration prepares for its early-2026 announcement, the financial world will be watching closely to see if the leading candidate's rise in the odds markets translates into a formal nomination—and what that could mean for the direction of U.S. monetary policy.

Correction: An earlier version of this article misstated the timeline for the current Fed chair's term. Jerome Powell's term ends in May 2026, not 2025.