Hassett Tipped for Fed Job as Trump Pushes for Faster Rate Cuts

President Donald Trump is moving toward naming a successor to Jerome Powell as chair of the United States’ (US’s) Federal Reserve, and financial markets increasingly assume that Kevin Hassett, the president’s top economic adviser, is the frontrunner.

Powell’s second term as chair runs to mid-May 2026, but Trump has said he has already chosen a replacement and signalled that the name will be made public early in 2026, after weeks of hinting that a decision is close and allowing speculation about Hassett to build.

Behind that speculation sits a simple political and economic calculation. Trump wants a chair who will cut interest rates faster and deeper than Powell has been prepared to do, in order to lower borrowing costs for households and firms ahead of the next election cycle. Hassett is well placed to deliver such an approach because he already sits at the centre of the White House economic machine as director of the National Economic Council, after earlier serving as chair of the Council of Economic Advisers during Trump’s first term.

Investors know him as a veteran Republican economist with a record at the American Enterprise Institute, a prominent think tank with long-standing ties to the Republican Party. He was also an economic adviser in the campaigns of three Republican presidential candidates, John McCain, George W Bush, and Mitt Romney. This makes him both a trusted loyalist in Trump’s circle and a figure who understands how central banking and bond markets work.

Hassett’s recent public comments leave little doubt about his preferences. In a November television interview he said that if he were already running the central bank he “would be cutting rates right now” because “the data suggests that we should”. In another appearance he told viewers that Americans could expect Trump to pick someone who would deliver cheaper car loans and easier access to mortgages at lower rates.

Those lines have been read on Wall Street as a clear signal that a Hassett-led Fed would lean more aggressively toward growth and employment than Powell has, even as inflation has cooled from its post-pandemic peak but remains a concern.

The backdrop is a US economy that has already lived through a full hiking cycle and the start of a cutting phase. The Fed began hiking rates in March 2022, lifting them steadily from near zero to more than 5% to deal with an inflation spike that followed Covid lockdowns, and the shock to energy and food prices from the Ukraine war. It has since begun to trim those rates back, leaving policy still well above the ultra-loose settings of the late 2010s.

While inflation has fallen, it has not settled comfortably at the Fed’s 2% target, unemployment has edged higher, and new rounds of tax cuts and spending are being prepared in Washington. Markets therefore assume that any new chair will have some room to ease further, but not to drive borrowing costs back toward zero without risking another surge in prices.

So far, the market response to the growing likelihood of a Hassett appointment has been measured. Pricing in futures markets points to a handful of small cuts spread over the next year rather than a dramatic lurch toward very cheap money. The Treasury yield curve has steepened slightly as traders factor in the chance of lower short-term rates and a softer dollar in 2026, while market-based inflation expectations remain only modestly above target. Investors appear to be signalling that they expect more political pressure for easier policy, but not yet a wholesale loss of discipline.

The political pressure is nevertheless real. Trump has repeatedly attacked Powell for not cutting fast enough and made clear that he wants a chair who will move more aggressively to support growth and housing affordability. That stance has revived arguments over the independence of the Federal Reserve, with critics warning that if investors come to believe interest rate decisions are being driven mainly by short-term electoral needs, longer-term borrowing costs could rise and the dollar could weaken more sharply as the central bank’s inflation fighting credibility erodes.

Supporters of Hassett counter that structures within the Fed could limit how far any one chair can bend policy in the White House’s direction and that Hassett’s mainstream economics background suggests he understands those constraints.

For now, Powell remains in charge and will preside over the December meeting, where markets expect another modest rate cut that keeps alive the idea of a careful mid-course adjustment instead of a rush to easy money.

Should Powell not be reappointed, his successor will take over in mid-May 2026. His successor seems very likely to be Hassett, with markets already treating every speech or interview by him as a preview of how the next era of US monetary policy is likely to unfold.