President Donald Trump said on Sunday that he has decided on his pick for the next chair of the Federal Reserve and made it clear that he wants his nominee to lower interest rates.
“I know who I’m going to pick. That’s right,” Trump told reporters on Air Force One as he returned to Washington, but he did not disclose the name. “We’ll announce it.”
Trump has repeatedly criticized the current Federal Reserve Chair Jerome Powell for not cutting interest rates quickly enough and has hinted that he wants to appoint a chair who would more forcefully pursue rate cuts. Last week, people familiar with the matter told Bloomberg News that Kevin Hassett, director of the White House National Economic Council and Trump’s chief economic adviser, is seen as a possible successor to Powell.
Hassett earlier on Sunday on CBS’s “Face the Nation” said he would not comment on whether he thought he was a leading candidate to succeed Federal Reserve Chair Jerome Powell, calling the reports “rumors.” But he noted that markets had reacted positively to the news that Trump was about to make a nomination – a deft response to investor concerns that he was too close to the president.
“The Treasury auction was very successful and interest rates came down. I think the American people can expect President Trump to choose someone who can help them get cheaper auto loans and more convenient and lower-interest mortgages,” Hassett told CBS. “We saw that in the market’s reaction to the rumors about me.”
According to informed sources, Trump trusts Hassett and believes that he shares his wish for the Federal Reserve to cut interest rates more aggressively. Hassett has said that he would accept the position if invited, but analysts have warned that he may struggle to unite the Fed’s rate-setting committee and be more vulnerable to Trump’s pressure. His emphasis on market reactions is actually a rebuttal to these concerns.
Although Trump is known for last-minute changes, the news that Hassett might be nominated for the position once pushed the yield on the 10-year US Treasury note below 4%.
Scott Benson, the finance minister in charge of the selection process, said last week that Trump might announce his nominee before the Christmas holiday on December 25.
Apart from Hassett, other candidates include Federal Reserve Governor Christopher Waller and Michelle Bowman, former Federal Reserve Governor Kevin Warsh, and Rick Reed of BlackRock. Trump has also repeatedly expressed his hope that Bessen would take the chair, but Bessen has repeatedly turned down the proposal.
Whomever Trump selects as the chairperson of the Federal Reserve will need to be confirmed by the Senate. If the nominee is an outsider, the term of the Federal Reserve governor could be 14 years, starting from February next year. Powell’s term as the chairperson of the Federal Reserve will end in May.
