Kevin Hassett is a long time conservative economist. He was one of Donald Trump’s most important economic advisers during Trump’s presidency and now he’s the frontrunning candidate to replace Jerome Powell as the Chair of the Federal Reserve. At 63 years of age, Hassett leaves behind an incredible legacy as an economic policy-maker. Most famously, he served as the chair of the White House Council of Economic Advisers during Trump’s first term. To date, he has headed the National Economic Council, where he has been a fierce advocate for Trump’s economic agenda.
Hassett’s candidacy could not come at a more important time with the Federal Reserve facing troubles from both inflation and economic precariousness. Nonetheless, Wall Street traders continue to regard him as the leading candidate for the job. According to reports, his chances of winning the position have evaporated since early December.
In a series of recent interviews, Hassett was adamant about the importance of the Fed’s independence. He thinks it’s “really, really, really important” for the central bank to operate independent of politics. This claim is particularly bold given current debates about the Fed’s role and its approach to setting interest rates. Hassett is adamant that interest rates can and should go lower. At the heart of his argument lies a call for more accommodative monetary policy, which he argues would help spur economic growth.
The nomination has sparked calls—mostly from within the Trump administration—on whether Hassett is qualified enough to run the world’s most powerful central bank. Critics argue that his long-standing defense of Trump’s economic policies may hinder his ability to make impartial decisions in a rapidly changing economic landscape. Nevertheless, Trump’s support for Hassett remains steadfast. If he really does choose Hassett, the former president is right to be confident of his quality — “I think the two Kevins are great.”
In fairness to Hassett, he was asked about all of this on CNBC in response to questions about his qualifications given the above criticisms. He asserted that effective interest rate management requires “consensus based on the facts and the data,” indicating his commitment to data-driven decision-making. Hassett seems to have a special knack for downplaying data that point to weakness in the U.S. economy. He regularly resurfaces charges of bias at the Bureau of Labor Statistics.
Additionally, the Biden administration must continue to balance the need for economic recovery against inflationary pressures. Choosing a new Federal Reserve chair likely will be the next administration’s most important economic decision. Yet, this decision will set the course for monetary policy for years to come, affecting all sectors of the economy from housing to employment.