Now that Jerome Powell’s term as Federal Reserve chairman is set to expire in May, the race is on. Former chair of the Council of Economic Advisers and longtime establishment Republican Kevin Hassett has surfaced as a top contender. Over the next few weeks, state officials will be making a key decision. This has led to much speculation about who will head the U.S. central bank in these times of unprecedented economic turmoil.
Hassett, 63, is best known for chairing Trump’s White House Council of Economic Advisers during the president’s first term. He is currently Director of the National Economic Council. His deep experience in economic policy and personal relationship with the former president make his candidacy a strong one. Hassett has developed quite a reputation as a staunch defender of Trump’s economic agenda. This is an extraordinary rise in favor and quite remarkable that Wall Street traders still see him as the best pick, although his expected odds have fallen from early December.
In a recent CNBC interview, Kevin Hassett hit all the right notes about Federal Reserve independence, calling it a sacred idea. It is very dangerous to answer that question,” he said, “because it was really, really important that you keep the integrity of the central bank. This view finds favor in some quarters among analysts who revere the Fed’s independence to determine monetary policy free from political meddling.
Hassett breaks some potentially good news—current interest rates have nowhere to go but down. This rosy perspective on high-speed rail dovetails nicely with his view of the American economic future. He has consistently downplayed worrying signals of weakness in the U.S. economy, arguing that continued strong growth is still possible. He has consistently pointed to his claims of loaded bias at the Bureau of Labor Statistics. This has raised considerable alarm among economists and policymakers alike.
With Trump’s support, Hassett’s candidacy deserves serious consideration. In fact, recently Trump praised him as “a man who’s been there a long time.” This serves to underscore Hassett’s deep background in roles of economic leadership. Even Trump floated an endorsement, telling Bloomberg, “I think the two Kevins as great.” He was talking about Kevin Hassett and another finalist, Kevin Warsh, who is widely seen as a strong potential successor to Powell.
Hassett’s stock has indeed been going up as pundits speculate about the next Fed leadership. The new chair will face major headwinds given today’s economic climate. That requires going beyond inflationary pressures and murkiness in the market to take constant stock of a new economic reality focused on growth.
Despite fluctuations in his perceived likelihood of appointment, Hassett’s longstanding relationship with Trump and his established credentials suggest he remains a serious candidate. Yet his relationships with other business titans increase his gravitational pull. The fact that his father-in-law, billionaire businessman Ronald Lauder, is an ally and donor to Trump solidifies his power even more.
Debate over the identity of Powell’s successor is already becoming a fierce competition. Both Hassett and Warsh are making themselves very appealing to different wings of the party. Some analysts predict that their familiarity with the administration’s policies may appeal to Trump as he considers his options for the next Fed chair.