Market observers noted on Monday that Kevin Hassett, Director of the White House National Economic Council and previously considered a near-certainty for Federal Reserve Chair, has recently faced resistance among influential circles close to President Trump. Ironically, the very trait that initially positioned Hassett as a frontrunner—his proximity to the President—has now sparked concerns about excessive alignment with the administration.
This tension reportedly contributed to the postponement of candidate interviews originally scheduled for early December, though discussions with former Fed Governor Kevin Warsh resumed last week. In a Friday interview, Trump unexpectedly elevated Warsh alongside Hassett as top contenders, stating, "I think both Kevins are great." The announcement jolted prediction markets, where Hassett's odds dipped to 51% from over 80% earlier this month, while Warsh's surged to 44% from roughly 11% in early December.
Sources indicate the pushback manifests more as amplified support for Warsh rather than direct criticism of Hassett. At a JPMorgan event last Thursday, CEO Jamie Dimon praised both candidates but was interpreted by attendees as subtly favoring Warsh.
Media reports in late November had positioned Hassett as the leading candidate to succeed Chair Powell, whose term expires in May. However, December saw growing market and policy concerns—particularly about potential bond market volatility. Some warn investors may doubt Hassett's independence if inflation resurges, potentially driving long-term Treasury yields higher—a scenario counter to Trump's goal of reducing borrowing costs.
Addressing these concerns, Hassett recently emphasized Fed independence in a rare public remark: "The President has strong, informed views, but ultimately the Fed must remain independent, collaborating with the Board and FOMC to reach collective decisions on rates." When asked whether presidential opinions carry equal weight with voting policymakers, he unequivocally stated: "No, absolutely not. Zero weight. It’s just an opinion—only relevant if data-driven and reasonable."
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