Trump says he will make Fed chief announcement in early 2026
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US President Donald Trump speaking during a Cabinet meeting at the White House on Dec 2.
PHOTO: AFP
Follow topic:
- Trump will announce his pick for Fed chair in early 2026, succeeding Jerome Powell whose term ends in May.
- Kevin Hassett, a loyal economic adviser favouring lower rates, is a frontrunner, with Trump valuing his input.
- Despite Trump's preference, economists predict economic conditions will dictate monetary policy, limiting rate cuts.
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WASHINGTON - President Donald Trump said on Dec 2 he would be announcing his choice to succeed Mr Jerome Powell as head of the Federal Reserve early in 2026, further teasing out a months-long audition process despite having said he already knows who he will pick to lead the world’s most important central bank.
In remarks at a Cabinet meeting, Mr Trump also said Treasury Secretary Scott Bessent - who has led the search process - does not want the top Fed job, and the president did not indicate who his preference may be.
Mr Trump told reporters on Nov 30 he knows who he plans to pick as the successor to Mr Powell, whose run as Fed chief comes to an end in May, but wouldn’t answer when asked if that choice was Mr Kevin Hassett, his top economic adviser and the favourite in online wagering markets.
Mr Hassett, 63, who chaired the White House’s Council of Economic Advisers during Mr Trump’s first term, has proven his loyalty to the president through regular, if not weekly, television appearances on CNBC, Fox News and other channels, where he has endorsed Mr Trump’s sweeping import tariffs and calls for lower interest rates.
Mr Trump, an avid television watcher, likely sees Mr Hassett often, as opposed to most of the other candidates. Mr Hassett, whose office is in the West Wing, also has direct access to the president and has helped shape his views on trade and economic issues, as well as monetary policy.
Advocates of lower interest rates
The others in the mix to succeed Mr Powell include two sitting Fed governors - Ms Michelle Bowman and Mr Christopher Waller - former Fed governor Kevin Warsh and BlackRock’s Mr Rick Rieder.
Mr Bessent has said he has completed two rounds of interviews with each of them and was planning to present a narrowed list of finalists to Mr Trump and other White House officials this month.
Mr Trump has made no secret of his preference for someone who favours lower rates, and Mr Hassett and the others have been vocal advocates for exactly that, a preference that could be challenged by a buoyant economy that has made many Fed officials wary of easier policy.
With an end to the process approaching, economists and financial markets have turned to what Mr Trump’s choice will mean for the monetary policy outlook under a new leader likely to be welcomed by an economy regaining momentum in 2026 but struggling to create jobs and still throwing off elevated inflation.
White House economic adviser Kevin Hassett is thought to be the frontrunner to lead the US central bank.
PHOTO: REUTERS
“Regardless of who leads the Fed, in the first order monetary policy is determined by economic conditions,” Mr James Egelhof, chief US economist for BNP Paribas, said in a conference call about the bank’s 2026 outlook.
That outlook included the expectation that resilient growth and persistent inflation would allow for just one rate cut next year following the one anticipated at the US central bank’s December 9-10 meeting, with Mr Trump’s new Fed chief left holding borrowing costs steady amid sticky 3 per cent inflation.
The Fed has a 2 per cent inflation target.
“The data will suggest little need for aggressive rate cuts beyond those we expect to be delivered,” Mr Egelhof said. REUTERS
