Federal Reserve News: Donald Trump picks next Fed chair; Kevin Hassett to succeed Jerome Powell?

U.S. President Donald Trump has already chosen who will lead the Federal Reserve next. While the name has not been formally announced, markets and policymakers are treating this as one of the most consequential economic decisions in years. The timing is critical. It lands just days before the December 10 FOMC meeting, at a moment when the central bank is divided on whether to cut interest rates further and when recession concerns are re-emerging in labour-market data.

Prediction markets, analysts and investors widely expect National Economic Council Director Kevin Hassett to be the frontrunner. That expectation alone has already begun shaping bond markets, inflation expectations and even the price of gold today, underscoring the weight of the decision.

Let’s break down why Hassett is the likely pick, the longstanding feud between Donald Trump and current Fed chair Jerome Powell, and more.

Who Is Kevin Hassett?

Kevin Hassett is best known for serving as Chair of the Council of Economic Advisers during Trump’s first term and currently leads the National Economic Council. A long-time supporter of supply-side economics, Hassett has publicly aligned himself with Trump’s view that interest rates in the United States are too high. 

Credible reporting from Reuters, MarketWatch and WSJ places him at the top of the shortlist. Here’s what strengthens the case around Hassett:

• He has signalled openness to taking the role, telling Reuters he would be “happy to serve”.
• He advocates faster and deeper rate cuts than the current Fed leadership.
• Betting markets on platforms such as Kalshi and Polymarket have priced his probability above 70%.

While other names remain in the mix, former Fed governor Kevin Warsh, current governor Christopher Waller, and regional Fed officials with long central-bank pedigrees, none match Hassett’s alignment with Trump’s monetary preferences.

Donald Trump–Jerome Powell Rift: A Feud Stretching Years

The decision cannot be understood without the context of the long-running Trump–Jerome Powell feud. Trump has criticised Powell repeatedly for maintaining rates he believes are “too restrictive” and for being slow to shift toward an easing cycle. Powell, in turn, has emphasised inflation control, institutional independence and data-driven policy.

Key reasons behind Trump–Powell rift:

• Powell raised rates aggressively from 2022 onward to curb inflation.
• Trump preferred rapid cuts to lower borrowing costs and stimulate growth.
• U.S. law prevents the President from firing a Fed Chair without cause, something Powell has publicly highlighted.

What’s changed now is not the feud itself, but the political timeline. Jerome Powell’s term ends in May 2026. Trump now has the authority to pick a successor who aligns with his vision, and he has made it clear that his litmus test is “much lower interest rates”.

Why Federal Reserve News Today Matters?

This is the biggest twist: the announcement comes just days before the December FOMC meeting. According to CME FedWatch futures data reported widely by CNBC and Reuters, traders are assigning an 87.6% probability that the Fed cuts rates on December 10. 

That number has swung wildly in recent weeks as the Fed grapples with new labour-market softening but still-elevated inflation indicators. That internal divide is stark:

• Several Fed officials believe more rate cuts are needed soon to prevent a deeper slowdown in hiring.
• Others argue inflation is still a threat and further easing risks undoing the progress made.

The Fed is already pulled in opposite directions. Trump’s announcement adds a third layer of complexity, a political signal that rate cuts should accelerate, even though Powell and incoming 2026 FOMC voting members have a more hawkish tilt.

Analysts warn that this dynamic could create a “shadow chair effect”, where US markets interpret Hassett’s likely policy stance even before formal nomination or confirmation.

What a Hassett-Led Fed Could Mean for Policy

If Kevin Hassett is indeed the pick, the Federal Reserve could shift in several important ways:

1. Lower Rates: Hassett has consistently argued that high rates pose risks to growth and consumer confidence. A Fed under his leadership may cut more aggressively, a stance that would ripple across mortgage rates, corporate lending and consumer credit.
2. Weakening of Dollar: More aggressive easing typically softens the dollar, which could lift exports but increase import-driven inflation. This also has a direct impact on the price of gold today, as gold tends to rise when the dollar weakens.
3. Redefinition of Fed Independence: A chair aligned closely with the White House raises the question: how politically neutral will monetary policy remain?
4. Market Volatility: Bond yields, equity valuations and commodity prices may become more sensitive to Fed communication.

US Fed at a Crossroads

Whoever Trump nominates will inherit a deeply split institution. Inflation has moderated but is not fully under control. Labour-market data shows early signs of cooling. Global growth is under pressure, and geopolitical risks remain elevated.

At the same time, the 2026 rotation of voting members on the Federal Open Market Committee brings a more hawkish group into the fold. Even a dovish chair may face internal opposition to aggressive easing.

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