Kevin Hassett, a serious policy hand—and loyal former President Donald Trump—kept. He has recently become the odds-on favorite to replace Jerome Powell as chair of the Federal Reserve. At 63 years young, Hassett certainly comes with a deep and rich resume. He was White House Council of Economic Advisers chair during Trump’s first term and now chairs the National Economic Council.
In a recent interview with the Wall Street Journal, he called Hassett “great.” He showed great confidence in Hassett’s ability. This loyalty to Trump has raised questions among analysts regarding Hassett’s potential independence should he assume the role at the Federal Reserve.
Hassett’s never been a shrinking violet on Trump’s economic policy, you might even say he’s been one of its fiercest defenders. First, he has downplayed the significance of a number of economic indicators that point to growing weakness in the U.S. economy. He explains how this data may not reflect the whole economic situation. He’s parroted Trump’s claims of bias at the Bureau of Labor Statistics. This kind of repetition makes us question whether he is being objective.
In a recent CNBC interview, Hassett cut to the heart of questions related to the independence of the Federal Reserve. He emphasized that “the Fed’s independence was really, really important,” indicating his recognition of the institution’s critical role in maintaining economic stability. Hassett mentioned that “the way you’ve got to drive interest-rate movements is with consensus based on the facts and the data,” suggesting a methodical approach to economic policy.
For all his newfound proximity to Trump, Hassett was still keen to stress that there is some play left for interest rates to drop. This statement aligns with Trump’s sentiment, who remarked, “He thinks you have to lower interest rates.” Such occupations reflect an undeniable eagerness to shift monetary policy toward a pro-growth posture. They raise questions about how Hassett would achieve the result of keeping Trump happy while respecting the traditional independence of the Federal Reserve.
The backdrop of Hassett’s candidacy is significant. He was the leading candidate for the Fed chair slot during Trump’s first term but lost out on the job at the last minute. His current candidacy though, does find him amid heightened debate over the direction of monetary policy and at a time of unprecedented economic challenges facing our nation.
Although many see Hassett as the leading candidate for the Fed chair slot, analysts are understandably gunshy. His deep personal ties to Trump could make the new job difficult to execute independent of a Trump Administration’s plans. One might wonder if he would ever put political loyalty ahead of economic prudence, particularly given the current state of economic volatility and uncertainty.