Trump Likely to Pick Kevin Hassett as Next Fed Chair After Cancelling Other Interviews

President Trump is preparing to name a new chair of the Federal Reserve (Fed), the institution that controls interest rates across the American economy. The current chair, Jerome Powell, has his term ending in May.

On Wednesday, the White House suddenly cancelled all remaining job interviews with candidates for Federal Reserve chair, strongly signalling that Trump has made his choice, which is largely speculated to be Kevin Hassett, his current top economic adviser.

Financial markets reacted immediately, with investors expecting Hassett would pursue lower interest rates than Powell has.

Who Is Kevin Hassett?

Hassett currently leads the National Economic Council, making him Trump's chief economist, responsible for executing the president’s economic strategy. He is a well-respected economist who has worked in senior roles under several Republican presidents, including Trump's first term.

Hassett’s potential nomination is significant due to his alignment with Trump’s stance on interest rates. Trump and current Fed chair Jerome Powell have been clashing over interest rates. Trump believes Powell has kept rates too high for too long, hurting economic growth. Trump has said rates should be no higher than 1.75%. They're currently at 4.5%. Tensions escalated when Trump publicly threatened to remove Powell from his position in July.

Hassett shares Trump's view that rates should come down. In November, he told Fox News he would "be cutting rates right now" if he were running the Fed. In another interview, he said Americans could expect Trump to choose someone who would deliver "cheaper car loans and easier access to mortgages at lower rates."

How Markets Responded

Financial markets moved quickly when news broke about the cancelled interviews. Investors took it as a sign that a Fed chair who favours lower rates is coming soon and overnight price action in the Asian and European markets provided a mini preview of what broader market movements we can expect should Hassett's appointment become official.

The dollar fell 0.3% to its lowest point since late October, as foreign investors sold off dollar-denominated assets in anticipation of lower returns. Bond yields shifted, short-term yields dropped while long-term yields rose slightly, and investors began moving money from safer government bonds into riskier assets like stocks.

Broadly, these market movements signal expectations of easier borrowing conditions ahead. Lower interest rates typically stimulate economic activity by making mortgages, car loans, and business financing cheaper, encouraging consumers to spend and companies to invest. However, this stimulus comes with trade-offs: a weaker dollar makes imported goods more expensive for American consumers, while potentially boosting exporters by making U.S. products cheaper abroad. The rise in long-term bond yields also reflects investor concerns that aggressive rate cuts could eventually reignite inflation.

This reaction also reflected growing expectations that the Fed would cut rates by 0.25% at its meeting next week.

The Independence Question

The Federal Reserve is supposed to operate independently from the White House. But Hassett's close ties to Trump and their matching views on economic policy have some people worried about whether that independence would hold up.

The Trump administration has strong political incentives to pursue lower interest rates that could ease financial pressure on Americans, especially with the US midterm elections coming up next year (this is broadly comparable to local government elections in South Africa).

The state of the economy remains one of the strongest forces shaping election outcomes. When voters feel financially stable and optimistic about the future, they are far more likely to support the party in power. Many middle- and lower-income Americans struggling with stagnant wages and high living costs, and so the upcoming elections will serve as a key test of public sentiment.

Even so, there is also a strong counterweight to any expectation of political influence. History shows that once in the role, the responsibility and scrutiny of the position tend to reinforce the Fed’s independence. Additionally, the chair does not decide interest rates alone. That decision is made by the Federal Open Market Committee, and any major change would require broad support.

What Happens Next

Trump is expected to announce his nomination for Fed chair before Christmas. If Hassett is formally nominated, he'll face confirmation hearings in the Senate Banking Committee. These hearings will reveal his specific policy plans and how he intends to balance the Fed's two main goals: keeping prices stable and maximizing employment.

Should he be confirmed, he’ll be expected to assume the position in May 2026.