Hassett Advocates for Fed Independence as Trump Supports “Two Kevins” for Leadership Role

Kevin Hassett defends the independence of the Federal Reserve as Trump considers him and Kevin Warsh for the position of chair, leading to shifts in prediction markets while the cryptocurrency sector remains cautious.

Key Takeaways

Kevin Hassett underscores the importance of the Federal Reserve's independence amid political pressures.
Hassett and Kevin Warsh are the leading candidates to succeed Jerome Powell as Fed Chair.
Prediction markets show fluctuating odds for both candidates.
Trump's influence is acknowledged but not deemed significant in the Fed's decision-making.
Recent interest rate cuts have left cryptocurrency markets largely unchanged.

Hassett Advocates for Fed Independence as Trump Supports “Two Kevins” for Leadership Role

Hassett Emphasizes Fed Autonomy in Recent CBS Interview

In a recent interview on CBS News’ Face the Nation, Kevin Hassett, a strong contender to become the next chair of the U.S. Federal Reserve, reinforced the importance of the central bank's independence from political interference. An announcement regarding the new Fed chair is anticipated by mid-January, as per various reports.

Addressing whether President Donald Trump’s viewpoints could impact the Fed, Hassett stated, “No, no, he would have no weight. It’s just his opinion matters if it’s good, you know, if it’s based on data.” He clarified that any policy suggestions would be evaluated solely on their merits by the twelve voting members of the Federal Open Market Committee. “If you present a solid argument made by the president, it will be considered, but if the committee disagrees, they will vote otherwise,” he explained.

The Race for Fed Chair Narrows

The competition to succeed current Fed Chair Jerome Powell appears to be tightening. On Friday, Trump shared with The Wall Street Journal that the race has come down to two leading candidates—Hassett and former Fed governor Kevin Warsh. "Yes, I think he is," Trump commented regarding Warsh’s position, adding, “I think you have Kevin and Kevin. They’re both — I think the two Kevins are great.”

Prediction markets have closely monitored this developing race. Early this month, platforms including Kalshi and Polymarket had Hassett's chances at a striking 85% to become the next chair. However, following Trump’s endorsement of Warsh, those odds fluctuated. At the time of writing, Hassett held a leading position on Polymarket with a 52% likelihood, while Warsh trailed at 39%.

Trump Wants Influence Over Interest Rate Decisions

In his Wall Street Journal interview, Trump emphasized that the next Fed chair should engage with him regarding interest rate policies. “Typically, that’s not done anymore. It used to be done routinely. It should be done,” he remarked. He added, “I don’t think he should do exactly what we say. But certainly, I'm a smart voice and should be listened to.”

In light of recent economic conditions, the Federal Reserve reduced interest rates by 25 basis points last Wednesday, setting the new target range at 3.5%–3.75%. Following this decision, the cryptocurrency markets showed minimal reactions, as reflected in market data.

During the Federal Open Market Committee meeting, Powell noted that “in the near term, risks to inflation are tilted to the upside and risks to employment to the downside, which is a challenging situation. There is no risk-free path for policy.”

Regarding future rate cuts, Trump signaled a preference for further reductions in 2026, indicating that Warsh also supports lowering interest rates. Trump stated, “He thinks you have to lower interest rates. And so does everybody else that I’ve talked to,” according to the Wall Street Journal.