As Kevin Hassett, 63, the White House National Economic Council (NEC) Chairperson, emerges as the leading candidate to be the next U.S. Federal Reserve (Fed) chair, concern is rising on Wall Street.
On the 3rd, the Financial Times (FT) reported that major bond investors conveyed to the U.S. Treasury their unease about the possibility that Hassett could be nominated as Fed chair. The worry is that, to suit President Trump's preferences, Hassett could push an aggressive interest rate cut.
According to the FT, the U.S. Treasury recently contacted Wall Street's big banks, asset managers, and key figures in the bond market one-on-one to gather opinions on the slate of Fed chair candidates, including Hassett. The process is said to have taken place before Treasury Secretary Scott Bessent conducted candidate interviews. Minister Bessent is overseeing the selection of a successor to Jerome Powell, whose term ends in May next year.
Hassett has rapidly risen as a strong contender as the field narrowed from 11 candidates in recent weeks, and on the 2nd President Trump directly called him a "potential Fed chair." At an event at the White House, Trump introduced Hassett to attendees, saying, "The potential Fed chair is here."
The FT said Wall Street's skepticism toward Hassett reflects the market's broader anxiety over a change at the top of the Fed. President Trump has publicly criticized Chair Powell and strongly pressed for rate cuts.
According to financial industry sources, the market is particularly worried that Hassett could force a rate cut even as inflation runs above the Fed's 2% target. One market participant told the FT, "No one wants a 'Truss turmoil'—the bond market plunge triggered by U.K. Prime Minister Liz Truss's tax cut policy in 2022."
Hassett is a pro-Trump economist who served as chair of the White House Council of Economic Advisers in Trump's first term and has fully supported Trump's economic policies, including tougher tariffs and rate cuts.
Robert Tetlow, a former senior adviser at the Fed, said, "Hassett is smart, articulate, and confident." Claudia Sahm, chief economist at New Century Advisors, also said, "Hassett is qualified to serve as Fed chair, but it remains to be seen how he would conduct himself," noting, "The key question is whether he will be an evangelist for the administration's policies or an independent Central Bank governor."
John Stoford of asset manager Ninety One said, "From the market's perspective, Hassett is seen as Trump's stooge," voicing concern that the Fed's independence could be undermined.