National Economic Council Director Kevin Hassett, a key contender for the Federal Reserve chair position, publicly emphasized the importance of central bank independence during a recent CNBC interview. With President Donald Trump reportedly nearing a decision on Jerome Powell’s successor, Hassett refrained from discussing his candidacy but underscored the necessity of building consensus within the Federal Open Market Committee (FOMC).
Hassett stated, “The Federal Reserve’s independence is really, really important, and the voices of the other people at the [FOMC] are important, too.” He elaborated that interest rate decisions should be derived from a consensus approach grounded in empirical data.
Until recently, Hassett had been viewed as the leading candidate to replace Powell, who is nearing the conclusion of his second term. However, in recent developments, Trump indicated that former Fed Governor Kevin Warsh has emerged as a strong competitor for the role, especially following their interview last week.
There has been some hesitance surrounding Hassett’s potential nomination, as sources revealed that advisors to the president are concerned he might be seen as too closely aligned with Trump. They fear he could prioritize the administration’s interests over the Fed’s mandate of maintaining stable prices and achieving maximum employment. In his defense, Hassett articulated that his relationship with Trump should not diminish his qualifications for the role. “The idea that someone isn’t qualified for the job because they are a close friend who’s worked well with the president is something that I think the President rejects,” he stated.
Despite having appointed Powell, Trump has frequently criticized the Fed chair, urging for more aggressive interest rate cuts. Although the FOMC has approved three consecutive cuts since September, reducing rates by a total of three-quarters of a percentage point, Trump remains dissatisfied. A Trump appointee, Governor Stephen Miran, has notably opposed these reductions, advocating instead for more substantial half-point cuts.
Highlighting his belief in the necessity for collaborative decision-making within the Fed, Hassett acknowledged the value of the president’s insights on the economy, suggesting that if Trump were to present a compelling argument, other Fed members would likely take notice.
Hassett and Warsh are among five finalists for the position, with Treasury Secretary Scott Bessent leading the selection process. Bessent indicated that a final decision regarding the new Fed chair is anticipated to be announced in early January.
