(Bloomberg) — President Donald Trump said Sunday he has decided on his choice for the next chairman of the Federal Reserve, after making clear he expects his nominee to cut interest rates.
“I know who I’m going to pick, yes,” Trump told reporters aboard Air Force One as he returned to Washington, without naming his choice. “We will announce it.”
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Trump has repeatedly rebuked current Fed chief Jerome Powell for failing to cut rates quickly enough and has indicated he wants a chairman who will pursue cuts more forcefully. People familiar with the matter told Bloomberg News last week that White House National Economic Council director Kevin Hassett, Trump’s chief economic adviser, is seen as a possible choice to succeed Powell.
Speaking on CBS earlier Sunday, Hassett declined to say whether she considered herself the frontrunner to replace Fed Chairman Jerome Powell and called the report a “rumor.” However, he cited positive market reaction to the news that Trump was being seen as close to his choice of name – a subtle response to concerns that investors would see him as too close to the president.
“We had a great Treasury auction, interest rates went down and I think the American people can expect President Trump to elect someone who will help provide them with cheap car loans and easy access to low-rate mortgages,” Hassett said on CBS. “That’s what we saw in the market’s reaction to the rumor about me.”
People familiar with the matter have said Trump trusts Hassett and views her as willing to push for more aggressive interest rate cuts at the central bank. Hassett has said he would accept the role if asked, although analysts have warned that he may have difficulty uniting the Fed’s rate-setting committee and may be more susceptible to pressure from Trump. His emphasis on market reaction was actually a denial of those concerns.
Although Trump is known for making last-minute changes, the possibility of Hassett being nominated for the position pushed the 10-year Treasury yield below 4%.
Treasury Secretary Scott Besant, who has overseen the selection process, said last week that Trump could announce his nominee before the December 25 Christmas holiday.
Along with Hassett, the other finalists include Fed Governors Christopher Waller and Michelle Bowman, former Fed Governor Kevin Wersh and BlackRock’s Rick Ryder. Trump also regularly says he would like to see Besant as president, a notion that Besant has repeatedly rejected.
Whoever Trump selects will need Senate confirmation as chair and will likely serve a 14-year Fed governor term that begins in February if the selection is an outsider. Powell’s term as chairman ends in May.
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