Battle for the Fed Chair Intensifies: Hassett Loses Front-Runner Status as Trump’s Decision Nears

The race to lead the U.S. central bank is becoming increasingly competitive. According to the latest market-based forecasts, the probability that Kevin Hassett will become the next chair of the Federal Reserve has fallen below 50%. The decline reflects growing uncertainty and mounting competition as President Donald Trump approaches a final decision. At the same time, markets are closely watching the Fed’s upcoming policy meeting. The prevailing expectation is that interest rates will remain unchanged, even as speculation about the future direction of monetary policy continues to build.

Rivals Close In as Hassett Is No Longer the Clear Choice Recent data from prediction markets show that the former front-runner is losing momentum. While Hassett was widely viewed as the most likely nominee in early December, his lead has since narrowed considerably. Other contenders—most notably Kevin Warsh and Christopher Waller—are drawing increased attention from traders and analysts. Although Hassett has publicly stated that he is prepared to take on the role, market sentiment has shifted. Warsh has gained traction in recent weeks, while Waller continues to be seen as a steady, credible option. A less likely but still discussed candidate is Rick Rieder, whose odds remain low but not negligible.

How Much Influence Could Trump Exert? The selection process has become increasingly politicized. Recent discussions featuring Anthony Scaramucci and Mike Novogratz highlighted Trump’s views on interest rates and monetary policy. Both suggested that Trump could pressure candidates to favor significantly lower rates to support his broader economic objectives. Scaramucci indicated that Trump might prefer rates as low as 1% during candidate interviews—an approach that would represent a substantial shift in policy. Similar views were echoed by Stephen Miran, who argued that further rate cuts could help the U.S. avoid a recession. Together, these perspectives have fueled expectations that the next Fed chair could adopt a more dovish stance. At the same time, they have heightened concerns about inflationary risks and the possibility that political considerations could exert unprecedented influence over the central bank.

Will the Fed Cut Rates in January? Despite rising political pressure, market expectations remain relatively conservative. Current forecasts suggest that only about 14% of traders believe the Fed will cut rates in January. The likelihood of a 25-basis-point move—either up or down—appears low, while the probability of rates remaining unchanged dominates. The chance of a more aggressive 50-basis-point cut is close to 1%, and the probability of a rate hike is negligible. Nevertheless, the intensifying debate over the Fed chairmanship points to the possibility of a more meaningful policy adjustment in the second half of next year.

The contest for the Fed’s top job remains wide open. Declining odds for Kevin Hassett, rising political pressure, and cautious market expectations have created an environment in which every new signal will be closely scrutinized—and rapidly reflected across financial markets.

#Fed , #interestrates , #USPolitics , #TRUMP , #Inflation

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