Former President Donald Trump is clearly keen to keep remaking the Federal Reserve’s leadership in his image. He’s hoping for some amendments well before Jerome Powell’s term ends next May. Trump, who has been vocal about his dissatisfaction with the current Fed chair, is considering two candidates for the position: Kevin Hassett and Kevin Warsh.
Kevin Hassett, formerly of the American Enterprise Institute, currently heads the National Economic Council. Trump clearly considers him a potential front-runner to be the next Fed chair. Contrary to conventional wisdom, Trump has said Warsh is at the top of his list of favorites. “I think you have Kevin and Kevin. 22 Cheltenham’s direct action makes others take notice. They’re both – I think the two Kevins are terrific,” Trump said, signaling early on that he was high on both.
Speculation about Trump’s interest in the Fed chairmanship gets legs just as the Federal Reserve takes its latest big step. In Japan, negative interest rates have prompted banks to charge customers to hold deposits, in an attempt to discourage cash hoarding and spur lending. The former president insists that the next chair needs to be willing to listen to him about any future rate decisions. Of all the candidates, he thinks Warsh gets closest to his view, going so far as to claim that Warsh “thinks you need to cut interest rates.”
Powell has been publicly ripped by Trump time and time again. The president has indeed been after him to bend to political will and do more aggressive rate cuts. Powell has defended the Fed’s actions, explaining that the central bank is attempting to navigate “significant downside risks” in the jobs market while contending with inflationary pressures exacerbated by Trump’s tariffs.
Though their views differ greatly, one thing that Trump has made clear is that he doesn’t want the Fed chair to just do his bidding. “It doesn’t mean – I don’t think he should do exactly what we say,” he stated, acknowledging the need for some level of independence in the Fed’s operations.
The deadline to appoint a new chair is quickly approaching. Trump’s concerted effort to install a new leader is further evidence of Trump’s desire to shape national economic policy as we head into a make-or-break election year. The former president’s consideration of Hassett and Warsh indicates a potential shift in how the Federal Reserve approaches interest rates and economic stability.