The race for the next Federal Reserve chair is reaching its dramatic final act, and the stakes could hardly be higher. As President Donald Trump returned to Washington on December 1, 2025, he made it clear to reporters aboard Air Force One that the decision was made: "I know who I am going to pick, yeah. We'll be announcing it." Yet, the president kept his cards close to his chest, refusing to reveal the name, fueling a frenzy of speculation in Washington and on Wall Street alike. The official announcement, according to Treasury Secretary Scott Bessent, is expected before Christmas.
According to Bloomberg and CNBC, the shortlist has narrowed to three main contenders: National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh, and current Fed Governor Christopher Waller. Each brings a distinct vision for the central bank, and their selection will send ripples through the U.S. economy, affecting everything from mortgage rates to global markets.
Kevin Hassett, the current director of the National Economic Council, is widely seen as the frontrunner. His alignment with President Trump's call for aggressive interest rate cuts has made him a favorite not only in the West Wing but also in the prediction markets. On December 1, 2025, Kalshi traders assigned a 79% probability to Hassett's appointment, while PredictIt and Polymarket gave him odds of 75% and 63%, respectively. The next highest bet, "no announcement by Christmas," trailed far behind at 22%.
Hassett, for his part, has been careful to avoid any public displays of overconfidence. Appearing on CBS' "Face the Nation," he said, "I'm really honored to be amongst a group of really great candidates." He added that Americans "could expect President Trump to pick somebody who's going to help them, you know, have cheaper car loans and easier access to mortgages at lower rates." On Fox News, Hassett was even more circumspect: "If he picks me, I'd be happy to serve."
The frontrunner's economic philosophy is no secret. Analysts and Bloomberg report that Hassett's views on monetary policy closely mirror Trump's own—favoring swift and substantial rate cuts to stimulate economic growth. This approach, supporters argue, could make borrowing more affordable for Americans and potentially boost job creation. However, critics warn that such a close alignment with the White House might threaten the Federal Reserve's cherished independence.
But Hassett isn't the only name being floated. Kevin Warsh, a former Fed governor and veteran of the 2008 financial crisis under President George W. Bush, is seen as a hawkish alternative. Warsh is respected for his steady hand during turbulent times, but his more conservative stance on interest rates may not mesh with Trump's appetite for rapid cuts. According to Bloomberg, Warsh's reputation for caution and crisis management could appeal to those worried about inflation or financial instability, even if it puts him at odds with the president's priorities.
The third major contender is Christopher Waller, a current Fed governor known for his moderate and pragmatic approach. Waller has supported recent rate cuts in response to softening job market data, but he remains committed to price stability—a stance that sometimes diverges from Trump's more aggressive demands. As CNBC notes, Waller would offer continuity and institutional stability, potentially reassuring markets wary of abrupt shifts in policy.
Whoever is chosen will inherit a central bank at a crossroads. The Federal Reserve's next policy meeting is scheduled for December 9-10, 2025, with a rate decision expected on December 10. Futures market traders are betting heavily on a cut, assigning an 87.6% chance that rates will be lowered. The Fed itself is deeply divided: some officials argue that further cuts are needed to shore up a weakening labor market, while others worry that inflation remains a threat and caution against too much easing.
President Trump has made no secret of his preference for a chair who will embrace lower rates. As CNBC reports, this has become something of a litmus test for the next Fed leader. Yet, the environment the new chair will face is anything but straightforward. In 2026, the Federal Open Market Committee will see a "hawkish tilt" as new regional presidents with a preference for fighting inflation rotate into voting positions. This could set up a tug-of-war between the chair's agenda and the broader committee's instincts.
But the debate isn't just about rates. Treasury Secretary Scott Bessent, who is overseeing the search, has called for a rethink of the Fed's mission. "We've gotten to this point where monetary policy has gotten very complicated, and it's more than just cutting rates," Bessent said in a recent CNBC interview. "I think we've got to kind of simplify things." He singled out the role of regional presidents, questioning their outsized influence and suggesting the Fed should "move back into the background like it used to do, calm things down and work for the American people, set monetary policy on a good course." Bessent's remarks hint at possible institutional reforms that could reshape the way the central bank operates for years to come.
This perspective has found support among some outside experts. Mohamed El-Erian, chief economic advisor at Allianz, commented on CNBC, "We don't need a play-by-play Fed. We need the Fed to cool it. We need the Fed to step back and take a bigger, sort of visionary view. And we need reforms. We desperately need reforms. And I think all five on the short list are committed to reforming that institution, which is critical, not just for the U.S. but for the global economy."
As the clock ticks down to the official announcement, the financial world waits with bated breath. The appointment will not only set the tone for U.S. monetary policy at a time of economic uncertainty but could also influence global markets, inflation dynamics, and the very structure of the Federal Reserve itself. The next chair will be tasked with steering the world's most influential central bank through a period of transition—balancing the demands of a president eager for stimulus, the concerns of inflation hawks, and the expectations of millions of Americans whose financial futures hang in the balance.
For now, all eyes are on the White House, the markets, and the man who holds the final say. The choice of the next Federal Reserve chair is more than a personnel decision—it's a turning point for the U.S. economy and the global financial system. As the year draws to a close, the stakes could hardly be higher.
