With the clock ticking down on Federal Reserve Chair Jerome Powell’s term, a high-stakes contest is unfolding in Washington that could reshape the future of U.S. monetary policy. President Donald Trump, who has made no secret of his dissatisfaction with Powell, is preparing to name a successor before Christmas 2025. The process, led by Treasury Secretary Scott Bessent, has narrowed to a shortlist of five contenders, but all eyes are on Kevin Hassett, the National Economic Council director and Trump’s trusted economic adviser, who has emerged as the clear frontrunner.
According to The Economic Times and Bloomberg, prediction markets are already moving in Hassett’s favor. As of early December, Kalshi pegged his chances at 79%, PredictIt at 75%, and Polymarket at 63%—with a notable 22% probability that Trump delays the announcement until after Christmas. Market participants and political insiders alike are betting that Hassett’s blend of pro-growth ideology, close rapport with the president, and public criticism of the current Fed’s pace on rate cuts have vaulted him to the top of the list.
Trump himself has played coy, telling reporters in the Oval Office last week, “I think I already know my choice,” while declining to tip his hand. On Air Force One, he teased that the announcement was coming “soon,” and, when pressed about Hassett, only smiled. Yet, the president’s allies and advisers, as reported by Bloomberg, are treating Hassett as the presumptive pick, and the financial markets are reacting accordingly. The dollar, Treasury yields, and equity sentiment have all begun pricing in the possibility of a more dovish Fed led by Hassett.
The stakes are considerable. Whoever steps into Powell’s shoes will inherit a divided central bank, with some officials warning that inflation remains stubborn while others argue that more rate cuts are necessary to protect a cooling labor market. The Federal Open Market Committee’s December 9–10 meeting is looming, and futures markets show an 87.6% chance of a rate cut at that gathering. The upcoming 2026 voting rotation is expected to skew hawkish, setting the stage for immediate tension between the White House’s desire for lower rates and a bloc of regional Fed presidents favoring restraint.
Bessent, who is overseeing the selection process, has been vocal about the need for reform. He wants to simplify the Fed’s mission, reduce the influence of regional presidents—whose frequent speeches and commentary often move markets—and return the institution to a more behind-the-scenes role. “The Fed’s role has expanded too far since the 2008 crisis and needs to step back into the background,” Bessent argued, according to The Economic Times. Several regional presidents face reappointment in 2026, giving the administration additional leverage to reshape the Fed’s leadership team.
Prominent economist Mohamed El-Erian has thrown his support behind Bessent’s push for reform, contending that the Fed needs fewer real-time commentaries and more long-term vision. “Reforms are desperately needed for both U.S. and global economic stability,” El-Erian said, signaling that changes at the top could have far-reaching implications beyond American shores.
The shortlist for the Fed’s top job includes, in addition to Hassett, Fed governors Chris Waller and Michelle Bowman, former Fed governor Kevin Warsh, and BlackRock’s head of fixed income Rick Rieder. Each brings a unique perspective to the table, but none has generated the same momentum as Hassett. Former Trump economic adviser Steve Moore sees the race as a three-person contest between Warsh, Hassett, and Bessent—though Bessent has repeatedly said he does not want the job, allies believe he would accept if pressed by the president.
Hassett’s credentials are formidable. He previously chaired the Council of Economic Advisers under Trump and is now leading the National Economic Council. Known as a market-focused conservative economist, he champions tax cuts, deregulation, and pro-growth policies. Hassett has long argued that lower taxes fuel investment and job creation. His views on monetary policy are similarly dovish: he has criticized the Fed for being too slow to cut rates and has called for a 50 basis point reduction in December—twice the size of the previous two moves.
In a recent interview with Yahoo Finance, Hassett emphasized the importance of Fed independence, sound money, and aligning rates with economic conditions. He criticized the central bank for assuming that the inflation spike around the pandemic and Biden-era stimulus was temporary, calling those higher prices “transitory.” Hassett further expressed concern that the Fed’s policy decisions have at times appeared partisan. “I think there’s a lot of house-cleaning needs to happen at the Federal Reserve, and I’m confident that anyone the president chooses will get to work and try to fix it and make the Fed independent again,” he said.
Hassett’s stance aligns closely with Trump’s push for cheaper borrowing and a more stimulus-friendly environment, signaling a potential shift toward looser monetary conditions if he takes the helm. Yet, he maintains that Fed independence is paramount, telling CBS’ Face the Nation that Americans should expect a chair who will help deliver lower borrowing costs without sacrificing the institution’s credibility.
Other contenders bring their own strengths and policy preferences. Chris Waller, already a Fed governor, was the first to call for lower rates following the Fed’s June meeting. He supports cutting rates out of concern for a weakening job market and believes inflation, excluding tariffs, is close to the Fed’s 2% target. Michelle Bowman, another Trump appointee, has penciled in three rate cuts for 2025 and is spearheading a reorganization of the Fed’s supervision and regulation division. She has advocated for more transparency in stress-testing banks and tailoring regulations to institutions’ size and risk profile.
Kevin Warsh, a former Fed governor and Wall Street liaison during the 2008 crisis, has criticized Powell’s leadership and argues that inflation is primarily driven by government spending and money printing. Rick Rieder, BlackRock’s bond chief, supports rate cuts and warns of significant labor market displacement over the coming years, though he remains optimistic about the broader economy’s resilience.
Still, the specter of political influence looms large. Alan Blinder, former Fed vice chairman and Princeton professor, cautioned that Trump’s focus on loyalty could threaten the central bank’s independence. “That is about the worst criterion for a Fed chairman I can think of,” Blinder told Yahoo Finance. He worries that markets are underestimating the risks of diminished central bank autonomy, which could have lasting consequences for inflation and the dollar’s global standing.
Once Trump names his nominee—likely before Christmas, though prediction markets still price in a chance of delay—the candidate will face a Senate confirmation process bound to be politically charged. With Powell’s term ending in less than 18 months, the decision will reverberate across financial markets, shape the path of interest rates, and test the boundaries of central bank independence at a pivotal moment for the U.S. and world economies.
The race for the Federal Reserve’s top job is entering its final stretch, and while nothing is official yet, Kevin Hassett remains the name to watch as the White House signals a new era for American monetary policy.
