President Donald Trump has injected fresh uncertainty into the race to lead the US central bank, signalling reluctance to nominate his top economic aide Kevin Hassett as the next chair of the Federal Reserve and reshaping market expectations about who will ultimately take the job.
Speaking at a White House event on Friday, Trump said elevating Hassett from his role as director of the National Economic Council would come at a political cost the administration is not eager to pay. Hassett, a familiar and forceful defender of Trump’s economic record on television and in policy debates, has long been viewed as a leading contender to replace current Fed chair Jerome Powell when his term expires in May.
“I actually want to keep you where you are, if you want to know the truth,” Trump told Hassett, adding that moving him to the Fed would deprive the White House of one of its most effective communicators. “If I move him, these Fed guys — certainly the one we have now — they don’t talk much. I would lose you. It’s a serious concern to me.”
The remarks immediately reverberated through financial markets and Washington policy circles, fuelling speculation that former Fed governor Kevin Warsh had surged to the front of the pack. Krishna Guha, head of central bank strategy at Evercore ISI, wrote in a note to clients that Trump’s comments would “catapult Warsh into pole position” in the contest to succeed Powell.
Markets appeared to agree. The dollar rebounded from session lows to trade modestly higher after Trump’s initial comments, while US stocks slipped into negative territory. Prediction markets also adjusted rapidly, lifting the implied probability of a Warsh nomination.
Treasury Secretary Scott Bessent, who is overseeing the search process, sought to play down speculation. Asked on Fox Business about Warsh’s prospects, Bessent said that “only the president knows” who will be nominated. “It’s his prerogative,” he said, stressing that the final decision rests solely with Trump.
Trump himself offered mixed signals later in the day. “I have it, in my mind, done,” he told reporters when pressed on whether he had settled on a nominee, before declining to identify the candidate. He reiterated his concern about losing Hassett from the White House, saying: “We don’t want to lose him. We’ll see how it all works out.”
Bessent expressed confidence that whoever Trump chooses would clear the Senate swiftly, describing the eventual nominee as someone “markets will respect and world leaders will respect,” and who cares about the Fed’s dual mandate of price stability and maximum employment.
Yet the confirmation process may be anything but smooth. The administration’s effort to reshape the Fed is unfolding amid a deepening confrontation with the institution, now complicated by resistance in the Senate. Republican Senator Thom Tillis, a key member of the Banking Committee, has vowed to oppose any Fed nominees until a Justice Department investigation into the central bank is resolved.
That investigation, which includes a move to subpoena the Fed, has sharply escalated tensions between the White House and the central bank. Powell has criticised the inquiry as a thinly veiled attempt to undermine the Fed’s independence, while administration officials insist it is a legitimate effort to ensure proper oversight of taxpayer resources.
Trump did not address the dispute directly on Friday but acknowledged that the selection process remains fluid. He has said he plans to announce his choice for Fed chair within the next few weeks.
Hassett’s standing in the race has fluctuated. Late last year, Trump advisers privately described him as the clear frontrunner. Since then, however, the president has broadened his search. In an interview with Reuters earlier this week, Trump said he was considering both Hassett and Warsh, among others. “The two Kevins are very good,” he said. “You have some other good people too.”
One of those names is Rick Rieder, a senior executive at BlackRock Inc., who Bessent confirmed had taken part in a final interview for the role.
Powell’s term as chair of the Federal Reserve ends on May 15, although he could choose to remain on the Board of Governors afterward, a scenario that would add another layer of complexity for his successor.
The timing of the leadership transition is delicate. US monetary policymakers are grappling with conflicting economic signals. Employment data in 2025 showed signs of softening, prompting the Fed to cut interest rates, and some officials argue that further reductions may be needed to support the labour market. At the same time, inflation remains stubbornly above the Fed’s 2 per cent target, leading others to call for a pause to ensure price pressures continue to ease.
A new Fed chair appointed by Trump would be expected to lean toward additional rate cuts, aligning more closely with the president’s long-standing preference for looser monetary policy. But forging consensus within the Fed’s rate-setting committee could prove challenging, particularly if Powell stays on as a governor and if political scrutiny of the institution intensifies.
For now, Trump’s public hesitation over Hassett has left the race wide open, underscoring how personality, politics and policy are colliding in the high-stakes decision over who will guide US monetary policy in the years ahead.
