Trump voices reluctance at nominating Hassett as Fed chair

WASHINGTON – President Donald Trump expressed reluctance toward nominating Mr Kevin Hassett as Federal Reserve chair, casting further doubt over his search for the next head of the central bank. 

Mr Trump on Jan 16 said if Mr Hassett were to leave his post as director of the White House National Economic Council, it would deprive the administration of one of its most powerful messengers on the economy. Mr Hassett has been seen as a top contender to succeed Fed Chair Jerome Powell. 

“I actually want to keep you where you are, if you want to know the truth,” Mr Trump told Mr Hassett during a White House event. “If I move him, these Fed guys – certainly the one we have now – they don’t talk much. I would lose you. It’s a serious concern to me.”

Analysts immediately speculated that Mr Trump’s remarks made former Fed Governor Kevin Warsh the front-runner
for the job. 

Mr Krishna Guha, head of central bank strategy at Evercore ISI, said in a note to clients the news would “catapult Warsh into pole position in the race to succeed Powell as Fed chair”.

Treasury Secretary Scott Bessent said on Fox Business on Jan 17 that “only the president knows” who he will nominate after being asked about Mr Warsh’s prospects. “It’s his prerogative,” he said.

“I have it, in my mind, done,” Mr Trump told reporters later on Jan 17 when asked if he had decided on a nominee. He declined to say which candidate he had chosen. 

The dollar rebounded from session lows to trade modestly higher after Mr Trump’s initial remarks, while stocks turned negative. Prediction markets also responded immediately, raising the odds that Mr Warsh would win the nomination.

“I believe the candidate who President Trump nominates will be confirmed quickly,” Mr Bessent said. “I think it will be someone who is substantial, who cares about the integrity of the Fed, cares about the dual mandate.”

Mr Bessent said the nominee will be someone who “markets will respect and world leaders will respect”.

The president’s effort to fill Fed vacancies is, however, facing obstacles in the Senate, which must confirm his nominees. Senator Thom Tillis of North Carolina, a key Republican on the Banking Committee, vowed to oppose any of the president’s picks until a Justice Department investigation into the Fed is resolved. 

The move to subpoena the Fed
dramatically escalated the Trump administration’s battle with the institution over its policy decisions. Mr Powell decried the inquiry as a barely veiled attempt by the White House to undercut the central bank’s independence. Administration officials have defended it as a necessary step to ensure proper stewardship of tax dollars.

The president did not address that dispute in his Jan 17 comments, but indicated the selection process still was not settled. He has recently said he plans to announce his nominee for Fed chair in the next few weeks. 

“We don’t want to lose him,” Mr Trump said of Mr Hassett. “We’ll see how it all works out.”

Late in 2025, Mr Hassett was seen by Trump advisers as the frontrunner for the job. But Mr Trump has continued to consider other candidates. 

In an interview with Reuters earlier this week, Mr Trump suggested he was considering both Mr Hassett and Mr Warsh for the role, among others. 

“The two Kevins are very good,” Mr Trump said. “You have some other good people too.”

BlackRock executive Rick Rieder on Jan 15 participated in a final interview for the role, Mr Bessent said on Fox Business.

Mr Powell’s term as head of the central bank ends on May 15. The search process is being led by Mr Bessent, who Mr Trump has said removed himself from consideration for the role.

Mr Trump’s search for a new Fed chair comes at a delicate time for monetary policymakers, as the US economy is pulling them in opposite directions. Employment showed signs of weakness in 2025, prompting officials to lower rates. Some at the Fed are calling for more cuts to bolster the jobs market.

But inflation also remains stubbornly above the central bank’s 2 per cent and several policymakers say it is time to hold rates steady to make sure policy puts downward pressure on inflation.

A new Fed chair is expected to enter office seeking additional cuts, in line with Mr Trump’s wishes. But their ability to build consensus on the Fed’s rate-setting committee could prove difficult.

That would be further complicated if Mr Powell decides to stay on as a governor after his term as chair ends. BLOOMBERG