Trump suddenly stated: has locked in the successor to The Federal Reserve (FED) chairman, and will strongly push for interest rate cuts.

U.S. President Trump stated on Sunday (November 30) local time that he has decided on the next nominee for the chair of The Federal Reserve (FED) after clearly requesting his nominee to push for interest rate cuts, and he will announce this decision soon. Sources told Bloomberg last week that Kevin Hassett, Director of the White House National Economic Council and Trump's chief economic advisor, is seen as a potential candidate to succeed Powell, only if there is a stronger push for interest rate cuts.

Trump Air Force One confirmed: The Federal Reserve (FED) chairperson has been decided

“I know who I'm going to choose, yes,” Trump said to reporters while on Air Force One returning to Washington, but did not disclose the name. “We will announce it.” Trump has repeatedly criticized current Federal Reserve Chairman Powell for failing to cut interest rates quickly and has indicated that he hopes for a chairman who will push for rate cuts more aggressively.

The sudden statement on Air Force One this time was not a coincidence. Trump has always been good at using media opportunities to create topics. By revealing this significant decision to accompanying reporters on the way back to Washington, he not only avoided the lengthy procedures of a formal press conference but also quickly occupied the headlines. This operational tactic has been commonplace throughout Trump's political career, as he knows how to drop a bombshell at critical moments.

Trump's dissatisfaction with Powell has a long history. Since the Federal Reserve began raising interest rates in 2018, Trump has publicly criticized Powell's policies as being too hawkish, believing that high rates have hampered U.S. economic growth and stock market performance. Although Trump cannot dismiss Powell before the end of his term (according to the Federal Reserve Act, the chair of the Federal Reserve can only be dismissed for “just cause,” and policy disagreements do not constitute just cause), he has clearly expressed his intention to replace him.

Trump's successor must meet one core standard: a willingness to push for more aggressive interest rate cuts. Within Trump's economic policy framework, low interest rates are a key tool for stimulating economic growth, reducing corporate borrowing costs, and boosting the stock market. This preference for low interest rates stands in stark contrast to the traditional principle of central bank independence and has raised concerns in the market about the politicization of the Federal Reserve (FED).

Hassett becomes the most likely successor

Sources told Bloomberg that Kevin Hassett, the head of the White House National Economic Council and Trump's chief economic advisor, is seen as a potential candidate to succeed Powell. Notably, according to market betting data predicted by Carl Hsieh, Hassett's chances of being nominated currently stand at 64%, a significant increase from less than 40% last Tuesday.

Hassett spoke earlier on Sunday on CBS's Face the Nation and declined to respond to whether he is considered a frontrunner to replace Federal Reserve Chairman Powell, calling the reports merely “rumors.” However, he noted that the market reacted positively to the news of “Trump nearing a decision on a candidate,” which also subtly addressed investor concerns that he may be too closely aligned with the president.

Hassett stated: “We had a very successful Treasury bond auction, and interest rates have fallen. I believe the American people can expect President Trump to choose someone who can help them secure cheaper auto loans and more easily obtain mortgages at lower rates. This is exactly the market's reaction to the rumors about me (possibly being nominated).”

This statement cleverly links his potential nomination with the interests of the public, emphasizing how low interest rate policies will benefit ordinary American families. Auto loans and mortgages are the two main debt burdens for American households, and lowering interest rates can indeed directly reduce the costs of these borrowings. Hassett attempts to build a public opinion foundation for his possible nomination through this narrative.

Sources say that Trump trusts Hassett and believes that he aligns with his stance on pushing the Federal Reserve (FED) to adopt more aggressive rate cuts. Hassett also stated that he would accept the position if invited, but analysts warn that he may struggle to unify the committee at the Federal Reserve (FED) responsible for setting interest rates and could be more susceptible to pressure from Trump. He emphasized that the market's reaction actually refutes these concerns.

Market Reaction and Plunge in Treasury Yields

Despite being known for his impulsive changes of mind, the prospect of Hassett being nominated briefly pushed the 10-year U.S. Treasury yield below 4%. Such a market reaction is extremely rare and indicates that investors have strong expectations for a more dovish Federal Reserve (FED) chair. The decline in Treasury yields means that bond prices are rising, reflecting market expectations that future interest rates will remain at lower levels.

The 10-year U.S. Treasury yield is one of the most important benchmark interest rates in the global financial markets, influencing various borrowing costs from mortgage rates to corporate bond yields. When this yield falls below 4%, it indicates a significant change in market expectations for economic prospects and inflation. Investors clearly believe that the Federal Reserve (FED) led by Hassett will be more inclined to cut rates than Powell, even when inflation is not yet fully under control.

U.S. Treasury Secretary Becerra is responsible for leading the selection process. He stated last week that Trump may announce his nominee before the Christmas holiday on December 25. This timeline means that the market only needs to wait for less than a month to get a definitive answer. During this time, any rumors about the candidates could trigger significant volatility in the financial markets.

Other candidates and Senate confirmation process

Other candidates besides Hassett:

Christopher Waller: Current member of the Federal Reserve (FED), monetary policy expert.

Michelle Bowman: Current member of the Federal Reserve (FED) Board, with a background in bank regulation.

Kevin Warsh: Former member of the Federal Reserve, who was seen as a potential successor to Powell's predecessor Yellen.

Rick Rieder: BlackRock executive with extensive asset management experience.

Scott Bessent: Currently the U.S. Treasury Secretary, Trump has repeatedly expressed a desire for him to serve as the Chair of The Federal Reserve (FED), but Bessent has declined multiple times.

This list of candidates includes insiders from The Federal Reserve (FED) and external experts, but Hassett's advantage lies in his close relationship with Trump and his clear support for interest rate cuts. In contrast, while Waller and Bowman have professional backgrounds, they may not be as willing to align with Trump's policy intentions as Hassett. Waller served at The Federal Reserve (FED) during the 2008 financial crisis, bringing experience but a relatively neutral policy stance. Riedel comes from the private sector, possessing market insights but lacking experience in government and central banking.

Any nominee ultimately selected by Trump will need to be confirmed by the Senate; if the nominee comes from outside the Federal Reserve system, they may also be nominated as a Federal Reserve Board member, serving a 14-year term starting in February next year. Powell's term as chair will end in May next year. The Senate confirmation process could become a key variable, as even with the Republican Party controlling the Senate, some moderate senators may have reservations about overly politicized nominees.