Frontrunner emerges in White House search for new Fed chair: report

President Doland Trump has made it perfectly clear that the Federal Reserve and particularly Fed Chair Jerome Powell are not doing his bidding.

Since taking office in January, the president has been demanding the independent central bank lower interest rates dramatically.

He has verbally attacked Powell personally and professionally over the Fed’s policy-making decisions to hold interest rates steady this year until its September and October meetings. 

For President Trump and his allies, those two quarter-percentage-point cuts were not large enough to keep the economy out of recession or stagflation, boost the stagnant housing market, and reduce billions in interest on the nation’s debt.

Hassett emerges as frontrunner to replace Powell: report

Powell’s term as chair is up in May. 

Traditionally, the search for a new chair would take place one to two months before the current chair stepped down.

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When it became clear to the White House that firing Powell was most likely illegal, the president and his allies started an active search this summer to find a replacement to “shadow” Powell until May.

A winner has yet to be named. 

But an exclusive Bloomberg report Nov. 25 said White House National Economic Council Director Kevin Hassett is the frontrunner to be the next Fed chair.

Bessent heads the search to replace Powell

White House Press Secretary Karoline Leavitt said in a cheeky statement Nov. 25 that “Nobody actually knows what President Trump will do until he does it. Stay tuned!”

Fed chair and governor picks are historically the most direct way through which a president can influence the central bank. 

Related: Fed splits ahead of key December meeting as rate-cut debate grows

Treasury Secretary Scott Bessent is leading the search to replace Powell as chair. 

Bessent’s mission is to find a candidate who will not only support slashing interest rates, but gain the trust of both the president and global financial markets.

Bessent told CNBC on Nov. 25 there’s a good chance the president could announce his Fed chair selection within the next month, before the Christmas holiday.

With Hassett, Bloomberg’s anonymous sources said President Trump would have a close ally whom he knows well and trusts.

Hassett candidacy raises some eyebrows 

Hassett told Fox News on Nov. 20 that he would “be cutting rates right now” if he were the chair of the Fed because “the data suggests that we should.” 

Hassett has also criticized the central bank for losing control of inflation in the wake of the pandemic.

Neil Dutta of Renaissance Macro Research predicted that Hassett could have trouble corralling other members of the Fed’s interest-rate setting Federal Open Market Committee to support his views.

“I don’t think Hassett will have an easy go of things next year if he’s chair,” he said. 

“He also looks like the one most easily bullied by Trump. Bessent less so,’’ Dutta told Bloomberg.

President Trump seeks control of central bank

The Fed has repeatedly served as a punching bag for Trump, with the president lambasting Powell for being “too late” to cut borrowing costs and publicly musing about firing him. 

The president has also assailed the cost of renovations on the central bank’s headquarters in Washington.

Trump has attempted to fire Fed Governor Lisa Cook over unproven allegations of mortgage fraud, a case that will be heard by the Supreme Court in late January.

Cook has maintained her innocence. The Fed has said in a statement it would abide by the court’s ruling.

President drops a subtle hint

Without revealing whom he would select as chair, the president on Nov. 18 said, “I think I already know my choice,” Bloomberg reported.

In September, President Trump said that Hassett, along with ex-Fed official Kevin Warsh and current Fed Governor Christopher Waller, were his top three candidates.

The Federal Open Market Committee meets Dec. 9-10 to vote on the benchmark Federal Funds Rate, which guides the cost of short-term borrowing.

The funds rate sits currently at 3.75% to 4.00%. The odds of a December interest-rate cut have rebounded sharply, with traders pricing in an 84.9% chance of a quarter-percentage-point cut Nov. 25 from less than 30 percent the previous week, according to the CME Group’s FedWatch tool.

Related: Fed official ignites December rate cut bets