Kevin Hassett, Christopher Waller and Kevin Warsh top Trump's new Fed chair list

Donald Trump said last week that he already knows who he wants to pick as the next Fed chair, even though the interviews haven’t wrapped up yet.

“I think I already know my choice,” he told reporters from the Oval Office. “I’d love to get the guy currently in there out right now, but people are holding me back.” Current chair Jerome Powell’s term ends in May, but Trump clearly isn’t interested in waiting that long.

Scott Bessent, who’s now running the Treasury Department, is the one handling interviews with the candidates. He confirmed Trump will be meeting all five of them soon. The shortlist includes current Fed governors Christopher Waller and Michelle Bowman, former governor Kevin Warsh, National Economic Council Director Kevin Hassett, and Rick Rieder, who runs fixed income for BlackRock.

Trump keeps dropping hints about Bessent, even though Bessent himself said twice last week that he doesn’t want the job.

Hassett says Fed failed on inflation and wants deeper rate cuts

Kevin Hassett is considered the top contender, according to Bloomberg. He already worked for Trump in the first administration and currently serves as director of the National Economic Council.

Hassett told Yahoo Finance that he’s big on keeping the Fed independent, fixing the way interest rates are set, and cutting rates to match the economy. He slammed the Fed for calling inflation during the pandemic “transitory,” saying they made serious mistakes by acting too late.

He also pointed out that the Fed hiked rates just after Trump’s tax cuts were passed, then decided to slash them again before the 2024 election.“I think they’ve made some bad policy decisions, and they’ve made policy decisions that look to me to be at times partisan,” Hassett said.“There’s a lot of house-cleaning needs to happen at the Federal Reserve.”

Hassett agrees with Trump that rates could go “a lot lower” and warned against pausing rate cuts in December, citing the unknown impact of the government shutdown. He supports a full 50 basis point cut next month and said he would accept the job if offered.

Jaret Seiberg from TD Cowen thinks Kevin Warsh might still have an edge, but agrees that Hassett remains a top option due to his frequent contact with the president.

Christopher Waller, Seiberg said, could be a fallback pick if there’s a deadlock.

“We would not describe any of the three leading contenders as traditional doves,” he said, noting that while they’ve all pushed for cuts, none are soft on inflation. “All three would risk a confrontation with Trump if inflation became a top concern.”

Waller, Bowman, Warsh, Rieder bring experience; and rate cuts

Christopher Waller, already a Fed board member, lines up closely with Trump on policy. He was the first one inside the central bank to call for a rate cut back in July. He now wants to cut again in December, saying the bigger threat is a slowing job market. He blames the drop in payroll growth mostly on lower demand, not just immigration.

Waller said he doesn’t see signs of rising wages or quits, and thinks inflation, excluding tariffs, is almost back to 2%. He called tariffs a one-off price bump. He was nominated by Trump and worked as research director at the St. Louis Fed for over a decade.

Waller told Fox Business that he spoke with Bessent about the job, saying, “I think they are looking for someone who has merit, experience, and knows what they are doing in the job, and I think I fit that.”

Michelle Bowman, also appointed by Trump, now serves as vice chair of supervision. She supports rate cuts because she thinks the labor market is looking more fragile. She’s already penciled in three cuts for the year and is backing another one soon.

Bowman’s been busy rewriting the bank playbook; she opposed Michael Barr’s Basel III plan, which would’ve raised capital requirements by 20%. She said that would “significantly harm the economy” and plans to drop a new version next year.

She also reorganized the Fed’s supervision unit, cutting staff by around 30%, and changed how the biggest banks get rated. She’s leading a proposal to publish stress-test models used by the Fed, which banks like.

Kevin Warsh once looked like the frontrunner earlier this year. He served on the Fed board from 2006 to 2011 and became Ben Bernanke’s main link to Wall Street during the 2008 crash. Trump had already interviewed him for this job once, eight years ago.

Warsh recently attacked Jerome Powell for “unwise choices,” arguing that post-pandemic inflation came from overspending and money printing, not wage growth.

Rick Rieder manages $2.4 trillion at BlackRock and sits on the Fed’s Investment Advisory Committee. He thinks a December cut is overdue.

In a recent chat with Yahoo Finance, Rieder said inflation is still hot, but labor problems are becoming more urgent. If you take out health care jobs, he said job growth was actually negative through spring and summer.

“I think that is something that is going to be persistent,” Rieder said. “Hopefully, the economy continues to be resilient, which I think it will … the economy’s in good shape, companies are in great shape, labor not so much.”

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