President Donald Trump is on the verge of announcing his pick for the next chair of the Federal Reserve, a decision that’s generating waves across financial markets, political circles, and the economic policy world. With Jerome Powell’s term set to expire in May 2026, speculation is mounting that Trump will tap his trusted economic advisor Kevin Hassett for the top job—despite a chorus of warnings from Wall Street and corporate America about the risks of putting a political loyalist at the helm of the world’s most influential central bank.
Trump confirmed on December 2, 2025, that he intends to reveal his nominee early in the new year. According to CNBC, Treasury Secretary Scott Bessent was offered the role but declined, stating there was a “great chance” the president would make an announcement before Christmas. Trump has said he already knows whom he’ll nominate, and all signs point to Hassett, currently serving as chief of the National Economic Council and a longtime Trump loyalist. The nominee will need confirmation from the Republican-controlled Senate, a process that could become contentious given the stakes and the controversy swirling around Hassett’s candidacy.
Hassett’s credentials are impressive on paper. He holds a PhD in economics from the University of Pennsylvania and has experience at prestigious think tanks and as an economist at the Fed. He previously served as head of the Council of Economic Advisers during Trump’s first term and is a familiar face on television, often explaining the administration’s economic agenda. But it’s precisely his close relationship with Trump—and his public willingness to align his economic messaging with the president’s political goals—that has investors and policymakers worried.
According to POLITICO, Trump’s next Fed chair faces a daunting challenge: navigating not just the complex internal politics of the central bank but also the president’s aggressive stance on monetary policy. Trump has made no secret of his frustration with Powell, whom he nominated in his first term, repeatedly criticizing him for keeping interest rates “too high” and even trying, unsuccessfully, to hasten his departure. Now, Trump is ratcheting up the pressure, pushing for policies that could make the central bank’s job even harder—like the proposed “tariff dividends,” which would send $2,000 checks to families making under $100,000, and continued tariffs that raise prices on imported goods.
“Putting Joe Biden’s inflation and affordability crisis behind us has been a Day One priority for President Trump, and this priority has informed nearly every major administration policy announcement,” White House spokesperson Kush Desi said in a statement. Desi emphasized that any discussion of potential Fed chair nominations is “pointless speculation” until an official announcement is made, and insisted that Trump’s economic team is “the best and most experienced in modern history.”
But Wall Street bosses and corporate CEOs are not reassured. As reported by On The Money, they have launched a last-ditch lobbying effort to dissuade Trump from picking Hassett. Critics argue that Hassett lacks the independence markets expect from a Fed chair, describing him as too eager to appease Trump by lowering rates—even if that means ignoring persistent inflation. “Hassett has a real lack of credibility inside the Fed and outside,” said one economist directly involved in the selection process. Bond investors are especially wary, with some warning the Treasury Department that Hassett’s appointment could undermine confidence and spark a sell-off in U.S. government bonds.
The stakes are high. If Hassett pushes through the rate cuts Trump wants, bond traders could interpret the move as inflationary, driving up longer-term interest rates and making mortgages and other loans more expensive. This could trigger what some have called a “Liz Truss moment”—a reference to the brief tenure of the former UK prime minister, whose economic policies spooked markets and sent interest rates soaring. As On The Money notes, consumer rates like mortgages are mostly priced off 10-year and 30-year bonds, not the Fed Funds rate, so the risk of market turmoil is real.
Hassett’s supporters counter that he is qualified and capable of building consensus within the Fed’s rate-setting committee, which consists of 19 members (12 with voting power). But even his allies acknowledge the challenge. As POLITICO reports, “the next Fed chair’s mandate grows more precarious by the day, and the tensions will be tricky to navigate for anyone, even longtime Trump adviser Kevin Hassett.” Hassett himself has tried to reassure skeptics, telling the Economic Club of DC that “once you trust someone, then you basically have the authority to be independent because you’re trusted.” Whether that trust can withstand the “extreme stress test” of managing both Trump’s demands and the Fed’s responsibilities remains to be seen.
Other contenders for the job include former Fed governor Kevin Warsh and current Fed governor Christopher Waller. Waller, who was appointed to the Fed by Trump in his first term, is favored by many investors and central bank insiders for his more measured approach. In a recent speech, Waller acknowledged that “the labor market is still weak and near stall speed,” and that inflation through September showed “relatively small effects from tariffs,” supporting the view that import duties are not a persistent source of inflation. The Fed has already lowered rates a couple of times this fall, with another cut expected soon, but the committee remains divided on how far to go.
Economists suggest that Hassett could be more effective if he adopts a moderate policy path and works to build consensus, rather than simply implementing Trump’s push for dramatically lower rates. As Deutsche Bank economists wrote in a client note, Hassett “might have trouble convincing his colleagues to cut rates if his primary objective was to implement the President’s stated goal.” Markets have so far responded calmly to speculation about Hassett’s nomination, but the Financial Times reported that bond investors remain uneasy.
Of course, no Fed chair is entirely free from political influence. Janet Yellen, for example, worked on Bill Clinton’s economic team before becoming Fed chair under Barack Obama and later served as Joe Biden’s Treasury Secretary. Powell, for his part, was criticized for aiding the Biden administration’s efforts to stimulate the economy after the Covid lockdowns, a move some say contributed to the recent inflation surge. But Hassett’s critics argue that his vulnerability to political pressure is especially pronounced, and that his appointment could erode the Fed’s credibility at a time when steady, independent leadership is most needed.
Ultimately, the next Fed chair will have to walk a tightrope—balancing Trump’s demands for lower rates and economic stimulus with the central bank’s mandate to keep inflation in check and maintain financial stability. As Mohamed El-Erian, chief economic adviser at Allianz, put it: “If the next Fed chair comes in, and their only objective is to accelerate the rate cuts, whoever the Fed chair is will face challenges.” The decision Trump makes in the coming weeks will set the tone for U.S. monetary policy—and global markets—for years to come.
