Donald Trump to pit Kevin Hassett against trio of Fed chair finalists – Financial Times

Donald Trump will soon launch a final round of interviews for Federal Reserve chair, pitting White House economic adviser Kevin Hassett against a trio of other candidates to replace Jay Powell.

The US president and Treasury secretary Scott Bessent are scheduled to meet former Fed governor Kevin Warsh on Wednesday, said three senior administration officials.

The officials said Hassett, the director of Trump’s National Economic Council, remains in pole position to succeed Powell as chair in May, despite concerns among some Wall Street investors that he is too close to the president and could cut interest rates too aggressively.

But the decision to carry on with additional interviews shows Hassett’s selection is not guaranteed. Officials have also raised the prospect of him serving for a truncated term.

Trump addressed the Fed selection with journalists on Air Force One, after the Financial Times reported the final round of meetings.

“We’re going to be looking at a couple different people, but I have a pretty good idea of who I want,” the president said.

Bessent presented a list of four names to the White House, according to the officials, with Hassett and Warsh among them. The other two would be selected from the list of other finalists, which includes Fed governors Christopher Waller and Michelle Bowman and BlackRock’s Rick Rieder.

The president and Treasury secretary are expected to hold at least one interview next week, before announcing the final decision in early January.

Susie Wiles, Trump’s chief of staff, could also attend the interviews. The president’s pick would need to be confirmed in the Senate.

A White House spokesperson said: “Personnel decisions to be made by President Trump will be announced directly by President Trump himself. Any discussion until then is pointless speculation.”

Hassett has emerged as a frontrunner in recent weeks. Should he move to the Fed, one possibility is for Bessent to take over his role at the NEC in the interim while remaining at the Treasury, said four people familiar with the matter.

Administration officials have also discussed the possibility of Hassett serving a shortened term, said the three people familiar with the matter. Hassett had proposed to Bessent that he take Powell’s seat on the board of governors, which expires in January 2028, two people said.

Powell has yet to decide whether or not he will step down as governor when his term as chair expires.

Trump has frequently said he would like to see Bessent as Fed chair, but the Treasury secretary has said he does not want the job. However, a shorter term for Hassett at the helm of the US central bank could allow Bessent to move to the Fed later in the president’s second term.

Fed chairs serve renewable four-year terms, with few recent heads of the central bank serving less than that and several working successive stints.

Hassett’s emergence as the frontrunner has spooked some bond investors, who told the Treasury they fear he could cut rates indiscriminately — a move that they believe could destabilise the $30tn Treasury market if it results in persistently high inflation, the FT reported last week.

The NEC head has in recent days sought to emphasise the importance of central bank independence. Hassett said at a Wall Street Journal event on Tuesday that, while he believed there was still room for more rate cuts, “the most important job” of heading the Fed was “to be looking at the economic data and to avoid being part of politics”.

Hassett, who worked for the Fed earlier in his career, served in two roles during the first Trump administration and has repeatedly advocated for the administration’s economic policies.

The president has spent the past year attacking Powell for not lowering US borrowing costs much more rapidly.

The Fed is widely expected to reduce borrowing costs by a quarter point on Wednesday — the third cut in a row. While such a move would reduce the federal funds target range to a three-year low of 3.5 per cent to 3.75 per cent, Trump has called for US borrowing costs to fall to 1 per cent.