Inside Trump’s Narrowing Search for the Next Fed Chair

Kevin Hassett, director of the National Economic Council, left, and Scott Bessent, the Treasury secretary, speak to reporters at the U.S. Capitol in Washington, D.C., in April. (Stefani Reynolds/Bloomberg)

Key Points

• President Donald Trump’s search for the next Federal Reserve chair will extend into the new year, with a decision unlikely before January.
• Trump is considering Kevin Hassett and Kevin Warsh, and will interview Fed governor Christopher Waller, who has advocated for rate reductions.
• The current target for the fed-funds rate is between 3.50% and 3.75%, but Trump wants rates closer to 1%.

President Donald Trump’s search for the next Federal Reserve chair is stretching into the new year, and the way the race is unfolding is offering investors an early look at what matters most to the White House and what questions the president is asking candidates.

Treasury Secretary Scott Bessent said Tuesday that a decision on the next Fed chair is unlikely before January, even as Trump interviews candidates and publicly signals frustration with the central bank’s direction. Speaking on Fox Business, Bessent said the president has been deliberate in his approach and may hold additional interviews over the coming weeks.

Bessent said Trump has been direct with candidates, asking detailed questions about Fed policy, the structure of the institution, and the outlook for the economy.

Trump told The Wall Street Journal last week that he is leaning toward Kevin Hassett, the director of the National Economic Council, or Kevin Warsh, a former Fed governor. Both enjoy close personal relationships with the president. But that closeness has become a central issue in the race.

Hassett addressed the question in a press gaggle Tuesday, pushing back on the idea that proximity to the president should be seen as disqualifying.

“It’s true that I’m close to the president, we’ve worked together closely since 2017,” Hassett told reporters. “I think that the idea that being close to the president and serving the president well disqualifies someone for any job just doesn’t make any sense.”

Hassett stressed that the Fed chair’s job is to run the central bank in a nonpartisan way and to focus on monetary policy. He echoed Trump’s criticism that the Fed has paid too much attention to issues outside its core mission and suggested the president has been disappointed by what he views as politically timed rate decisions.

Trump has repeatedly blamed Fed Chair Jerome Powell for keeping interest rates too high and has said the next chair should consult with him on rate policy. Trump told The Wall Street Journal last week that he wants interest rates closer to 1%, a level far below where they stand today at 3.50%-3.75%.

Bessent on Tuesday defended Hassett’s qualifications and rejected the argument that his White House role makes him unsuitable to lead the Fed. He noted that Janet Yellen served as chair of the Council of Economic Advisers before becoming Fed chair and that Lael Brainard moved between senior Fed roles and the White House.

“Kevin Hassett is an eminently qualified PhD economist with a great background,” Bessent said on Fox. He described Warsh as equally qualified, citing his experience as a Fed governor and his background in financial markets and law. Bessent said the idea that candidates might lack agency or independence because of prior roles is misguided.

The Wall Street Journal also reported Tuesday that Trump is set to interview Fed governor Christopher Waller, citing people familiar with the matter. Waller, whom Trump appointed to the Fed’s board, has emerged this year as one of the strongest internal advocates for interest- rate reductions. He dissented in favor of a cut in July, the last time the Fed held rates steady.

Jamie Dimon, the chief executive of JPMorgan Chase , also weighed in privately on the race at the bank’s annual asset management conference last week. According to people familiar with his remarks, Dimon said Hassett would likely move quickly to lower short-term interest rates, in line with Trump’s stated preferences.

But Dimon also warned that because markets may view Hassett as too close to the president, long-term rates might not fall alongside Fed cuts. The Fed controls short-term rates, but longer-dated yields, including on 10-year Treasury debt, are set by investors.

“Kevin Warsh would make a great chairman,” Dimon said, according to those present. Dimon also said his bank would be fine under either candidate.

Dimon has previously spoken publicly about the importance of Fed independence, warning in July that political interference could have adverse consequences for markets and the economy.

Bessent, meanwhile, said on Tuesday that one of the central questions in the interviews has been how candidates think about the future rather than the past. He said Trump has pressed candidates on productivity, artificial intelligence, and whether the Fed relies too heavily on backward-looking data.

Bessent also said the Fed needs to rebuild trust, not just with markets and businesses, but with the public. He argued that the central bank lost credibility during the inflation surge that followed the pandemic.

Write to Nicole Goodkind at nicole.goodkind@barrons.com.