White House officials are nearing the final phase of choosing the next Federal Reserve chair, with Kevin Hassett being the most favored candidate.

President Donald Trump has shown interest in picking someone who favors more interest-rate cuts, which, according to individuals who have participated in internal discussions, has put the National Economic Council director ahead of other candidates as the appointment process narrows.

Alignment on monetary policy shapes the President’s preferred direction

Individuals involved in the discussions say Trump views Hassett as someone who both understands and supports the president’s long-held view that interest rates should be lower. That alignment has been noted internally as the president evaluates potential successors to Chair Jerome Powell. Hassett strengthened his stance in a Nov. 20 Fox News appearance, stating that he would immediately reduce rates if he were leading the Federal Reserve, citing economic data as justification.

Trump has on multiple occasions argued that Powell was not aggressive enough in reducing rates as he would have wished during his first term. Such disputes resurfaced this month, reigniting doubts about Powell’s future after his term ends. The low treasury yield was encouraged by reports that the benchmark 10-year yield had risen in the selection process, as it dropped below the 4% mark for the first time in a month, in response to a more dovish policy path.

Karoline Leavitt, White House press secretary, affirmed that the decision has not been made, as the president is not the only person who can determine what to decide before he announces it publicly.

Candidate interviews enter their final week

Treasury Secretary Scott Bessent has been responsible for conducting interviews and assessing any possible nominees since the summer. 

According to a Bloomberg report, Bessent announced that this week will be the last week for interviews. After that, the number of candidates will be narrowed down, and those who pass will have a meeting with the White House Chief of Staff Susie Wiles and Vice President JD Vance. The management anticipates making its decision in the following month, and it may announce it before Christmas. Before the nominee can assume office, he or she must be confirmed by the Senate.

Earlier in November, Trump indicated that he had developed an opinion but refused to divulge who it was. He named the top three candidates, as he then publicly stated in September, as Hassett, Warsh, and Waller.

Trump’s allegations about Powell have intensified as the selection process moves forward. Last week, the president described Powell as “grossly incompetent” and reiterated his desire to replace him, while also suggesting. However, in a joking tone, he might consider removing Bessent if interest rates do not fall more quickly.

Powell’s term as chair expires in May 2026, though he could remain on the Board of Governors for an additional two years if he chooses. Another position will open on Feb. 1, when the current 14-year governor term held by Stephen Miran concludes. Miran is currently on unpaid leave from the White House Council of Economic Advisers.

Policy divisions define the Central Bank’s immediate outlook

In September and October, the Federal Reserve decreased interest rates by 25 basis points, following a period during which it had not cut interest rates. Although opinions on whether the December event will result in another interest rate cut seem split, authorities now vary in their evaluation of inflation rates and employment figures.

Neil Dutta of Renaissance Macro Research suggested that Hassett’s appointment may lead to him failing to win the vote within the Federal Open Market Committee, as policymakers currently hold diverse opinions. The decision on who will replace the current chair is likely to influence the path of the Federal Reserve as it weighs the conflicting economic indicators and prepares for the succession of leadership changes that will take effect next year.

Claim your free seat in an exclusive crypto trading community - limited to 1,000 members.