Have you ever wondered what it takes to steer the world’s most powerful central bank? The Federal Reserve, often just called the Fed, isn’t just about numbers and interest rates—it’s about shaping the economic future of millions. Right now, the spotlight is on who President Donald Trump will choose as the next Fed chair when Jerome Powell’s term ends in May 2026. It’s a decision that could ripple through markets, influence your savings, and even affect the price of your morning coffee. According to recent surveys, two names are dominating the conversation: Kevin Hassett, Trump’s trusted economic advisor, and Kevin Warsh, a former Fed governor with deep central banking experience. But here’s the kicker—while Hassett seems to be Trump’s likely pick, many argue Warsh is the more qualified candidate. So, what’s at stake, and who’s the better fit? Let’s dive into this high-stakes economic drama.
The Race for the Fed Chair: A High-Stakes Decision
The Fed chair isn’t just another government job—it’s a role that influences global markets, employment, and inflation. With Powell’s tenure winding down, speculation is heating up about his successor. Trump’s choice will signal his economic priorities, from tackling inflation to navigating trade policies. Recent surveys point to a tight race between Hassett, the director of the National Economic Council, and Warsh, a seasoned former Fed governor. But the decision isn’t just about resumes—it’s about politics, loyalty, and economic philosophy. Let’s break down who these candidates are and why they’re in the running.
Who Is Kevin Hassett?
Kevin Hassett is no stranger to the Trump administration. As the director of the National Economic Council, he’s been a key player in shaping economic policy, from trade deals to tax reforms. His close relationship with Trump makes him a frontrunner, as loyalty often weighs heavily in political appointments. Hassett has been vocal about the need for lower interest rates, aligning with Trump’s push to ease monetary policy and boost growth.
Hassett’s familiarity with Trump’s economic vision makes him a strong contender, but his appointment could raise questions about the Fed’s independence.
– Senior market strategist
Hassett’s background is impressive—he’s a doctoral graduate from the University of Pennsylvania and has held roles at prestigious institutions like Stanford’s Hoover Institution. But his lack of direct central banking experience has some experts raising eyebrows. Could his loyalty to Trump overshadow the Fed’s need for impartiality? In my view, while Hassett’s insider status is a strength, it’s also a potential liability in a role that demands independence from political pressures.
Who Is Kevin Warsh?
Kevin Warsh, on the other hand, brings a wealth of Fed experience to the table. At just 35, he became the youngest Fed governor in history in 2006, serving until 2011. During the 2008 financial crisis, Warsh was the Fed’s point person on Wall Street, navigating turbulent markets with a steady hand. His credentials make him a favorite among those who prioritize expertise over political alignment.
Warsh has been critical of the Fed’s current approach, calling for a “regime change” in monetary policy. He argues that the Fed’s outdated models fail to recognize economic growth potential, particularly in a world of rapid technological advancements. This perspective resonates with those who see the Fed as overly cautious, especially on interest rates.
The Fed needs a new approach, one that embraces growth without being stuck in the past.
– Former Fed governor
Warsh’s experience gives him an edge in understanding the Fed’s inner workings, but his outspoken critiques could make him a polarizing choice. Some argue he’s exactly what the Fed needs—a bold thinker unafraid to challenge the status quo. Others wonder if his push for change might disrupt the delicate balance of monetary policy.
Why the Fed Chair Matters to You
The Fed chair’s decisions touch nearly every aspect of your financial life. From the interest rate on your mortgage to the strength of the job market, their policies shape the economy’s trajectory. Here’s a quick look at why this role is so critical:
- Interest Rates: The Fed sets the federal funds rate, influencing borrowing costs for everything from car loans to credit cards.
- Inflation Control: The chair’s approach to monetary policy can keep prices stable or let inflation spiral.
- Job Market: Fed policies impact employment, affecting your job security or wage growth.
- Market Stability: The chair’s words can calm or rattle financial markets, impacting your investments.
With Trump pushing for lower rates, the next chair’s stance on monetary policy will be under intense scrutiny. Will they prioritize growth, as Trump desires, or maintain a hawkish stance to curb inflation? The answer could redefine your financial future.
Hassett vs. Warsh: A Side-by-Side Comparison
To understand the stakes, let’s compare the two candidates across key factors. Here’s a breakdown of their strengths, weaknesses, and what they bring to the table:
| Candidate | Experience | Strengths | Concerns |
| Kevin Hassett | National Economic Council Director, academic | Trusted by Trump, policy expertise | Limited Fed experience, independence concerns |
| Kevin Warsh | Former Fed governor, Wall Street liaison | Deep Fed experience, crisis management | Outspoken views may polarize |
Hassett’s loyalty to Trump makes him a safe bet for the administration, but his lack of central banking experience could be a hurdle. Warsh, with his proven track record, seems better equipped to navigate the Fed’s complexities, but his independent streak might clash with Trump’s agenda. Which factor will Trump prioritize—loyalty or expertise? That’s the million-dollar question.
The Economic Context: Tariffs, Inflation, and Rate Cuts
The next Fed chair will step into a challenging economic landscape. Trump’s proposed tariffs, often described as “reciprocal,” could push prices higher, complicating the Fed’s inflation-fighting efforts. Recent surveys suggest inflation will hover around 3% in 2025 and 2.9% in 2026—above the Fed’s 2% target. Meanwhile, the labor market is showing signs of cooling, with unemployment expected to rise slightly from 4.1% to 4.4%.
Economists are split on the tariff impact. Some believe they’ll cause a one-time price spike, while others warn of broader inflationary pressures. The next chair will need to balance these risks while addressing Trump’s push for rate cuts. Surveys predict two cuts in 2025—likely in September and December—bringing the federal funds rate to around 3.9%. But will that be enough to satisfy Trump’s growth-focused agenda?
The Fed is caught between political pressure for rate cuts and the risk of persistent inflation.
– Chief investment advisor
In my experience, predicting economic outcomes is like forecasting the weather—there’s always a chance of an unexpected storm. The next chair will need to be a master navigator, steering through tariff-driven inflation and political pressures while keeping the economy on course.
The Independence Question: A Delicate Balance
One of the biggest concerns about Hassett’s potential appointment is the Fed’s independence. The Fed is designed to operate free from political influence, but Trump’s vocal criticism of Powell and push for lower rates have raised red flags. A recent survey found 41% of respondents believe the next chair will act independently, while 37% expect coordination with the White House. The remaining 22%? They’re just not sure.
Hassett’s close ties to Trump could blur the line between monetary policy and political agendas. Warsh, with his Fed experience, is seen as more likely to uphold the central bank’s autonomy. But even Warsh has called for a new “Treasury-Fed accord,” suggesting a closer alignment with fiscal policy. Could this compromise the Fed’s independence in a different way? It’s a question worth pondering.
What to Expect at Jackson Hole
Every August, the Fed’s Jackson Hole symposium draws global attention. It’s where the chair often drops hints about future policy moves. This year, with Powell’s term nearing its end, all eyes will be on his keynote speech. Will he signal a dovish turn with rate cuts, or will he stay neutral to balance employment and inflation risks? Surveys suggest 70% expect a neutral tone, with only 14% anticipating dovish comments.
Perhaps the most intriguing aspect is whether Powell will address the Fed’s average inflation targeting strategy, which allows for higher inflation to offset past undershoots. Critics, including Warsh, argue this approach delayed rate hikes during the pandemic, fueling inflation. A new chair could push for reforms, potentially scrapping this strategy or adjusting the 2% inflation target.
Powell’s speech may surprise markets if he leans neutral instead of dovish.
– Managing director at a leading investment firm
The symposium could also shed light on the candidates’ visions. Will Hassett push for aggressive rate cuts to align with Trump’s agenda? Will Warsh advocate for a bold overhaul of Fed policy? The answers could sway Trump’s final decision.
Other Contenders in the Mix
While Hassett and Warsh dominate the headlines, other names are floating around. Fed Governor Christopher Waller, a Trump appointee, is a dark horse with a 14% chance in some surveys. His recent dissent in favor of rate cuts aligns with Trump’s views, but his lower profile makes him a long shot. Former St. Louis Fed President James Bullard and Fed Vice Chair Michelle Bowman also rank high when experts are asked who should lead the Fed, thanks to their central banking experience.
- Christopher Waller: Current Fed governor, favors rate cuts but lacks chair-level prominence.
- James Bullard: Former St. Louis Fed president, respected for policy expertise.
- Michelle Bowman: Fed Vice Chair, dissented for rate cuts, but less favored than Warsh.
Then there’s David Zervos, a wildcard whose odds spiked briefly on prediction markets. His outsider status makes him a less likely choice, but it shows how fluid this race is. The field is wide open, and Trump’s decision could surprise us all.
What’s at Stake for Markets?
The Fed chair’s appointment will send shockwaves through financial markets. A Hassett-led Fed might signal aggressive rate cuts, boosting stocks but risking inflation. A Warsh appointment could stabilize markets with his experience but unsettle investors if his reforms are too bold. Here’s what markets are watching:
- Stock Markets: Lower rates could fuel equity gains, but inflation fears might trigger volatility.
- Bond Yields: A dovish chair could push yields lower, affecting bond investors.
- Dollar Strength: Fed policy shifts could weaken or strengthen the dollar, impacting global trade.
Investors are also eyeing the Fed’s dot plot, a tool showing officials’ rate forecasts. Some argue it’s outdated and should be scrapped, while others want it refined. The next chair’s stance on this could influence market transparency and investor confidence.
My Take: Loyalty vs. Expertise
If I had to bet, I’d say Trump leans toward Hassett for his loyalty and alignment on growth-focused policies. But Warsh’s experience makes him the safer choice for markets craving stability. The Fed’s independence hangs in the balance, and that’s what keeps me up at night. A chair too closely tied to the White House could erode trust in the central bank, spooking investors and fueling uncertainty.
Then again, maybe Trump will surprise us with a wildcard pick like Waller or even Zervos. Whoever it is, they’ll need to navigate a minefield of tariffs, inflation, and political pressure. It’s not just about picking a name—it’s about setting the course for the U.S. economy.
What’s Next?
As the Jackson Hole symposium approaches, the world will be watching for clues about the Fed’s future. Trump’s decision may not come until late 2025 or early 2026, but the speculation is already shaping market expectations. Will he prioritize loyalty with Hassett or expertise with Warsh? Or will another contender emerge from the shadows?
One thing’s certain: the next Fed chair will face a daunting task. Balancing inflation, growth, and independence in a politically charged environment is no small feat. Whether it’s Hassett, Warsh, or someone else, their decisions will shape your financial future for years to come. So, keep an eye on this race—it’s one worth watching.
