Markets have been buzzing about a potential shake-up at the most powerful central bank in the world. The Federal Reserve, the institution that controls interest rates and essentially steers monetary policy for the entire U.S. economy, could soon have a new leader with very different ideas about how things should work.
Why does this matter to traders like you and me? Because the Fed Chair is arguably the single most influential person in global finance. Their decisions on interest rates ripple through every market: stocks, bonds, currencies, and commodities.
Right now, President Trump’s search for a replacement is signaling a major shift in how America might approach monetary policy.
Let’s break down who might be the top pick for the job, what they believe, and what it all means for the markets.
The Basics: What’s Happening Right Now
Jerome Powell’s days as Fed head are numbered. The current Fed Chair’s term expires on May 15, 2026, which is just six months away. While Powell could technically stay on as a Fed governor until 2028, his time calling the shots at the world’s most important central bank is coming to an end.
Trump wants him out pronto. Throughout 2025, President Trump has relentlessly criticized Powell for not cutting interest rates quickly enough. Trump has called him “too late,” a “major loser,” and even suggested he’d “love” to fire him (though legal experts say that’s not allowed). The tension has been building for months, with Trump making an unprecedented visit to the Fed’s headquarters in July just to criticize building renovations.Kevin Hassett has emerged as the frontrunner. Bloomberg and other major outlets are reporting that Kevin Hassett, who is currently Trump’s Director of the National Economic Council, is seen as the leading candidate to replace Powell.
Treasury Secretary Scott Bessent has narrowed the search to five finalists, and Trump is expected to announce his pick before Christmas. The shortlist includes:
- Kevin Hassett (current NEC Director)
- Kevin Warsh (former Fed governor, served during 2008 crisis)
- Christopher Waller (current Fed governor, Trump appointee)
- Michelle Bowman (current Fed governor and Vice Chair for Supervision)
- Rick Rieder (BlackRock’s head of fixed income)
The choice matters enormously because whoever wins this job will shape interest rate policy, influence the dollar’s strength, and potentially determine whether the U.S. economy can avoid a recession.
Who Is Kevin Hassett?
Kevin Hassett is a 63-year-old economist with deep ties to Republican administrations and conservative think tanks.
Academic credentials: PhD in economics from the University of Pennsylvania, taught at Columbia Business School in the early 1990s, and worked as an economist at the Federal Reserve Board from 1992 to 1997.
Conservative think tank background: Spent most of his career at the American Enterprise Institute, a prominent conservative policy organization, where he directed economic policy studies.
Government experience:
- Served as Trump’s Chairman of the Council of Economic Advisers (2017-2019)
- Returned to the White House in 2020 as a senior advisor during the COVID-19 pandemic
- Currently serves as Director of the National Economic Council (since early 2025)
The controversial book: In 1999, Hassett co-authored “Dow 36,000” with James Glassman, predicting the stock market would quadruple to 36,000 by 2002-2004. It didn’t happen until 2021, earning it the dubious title of “perhaps the most spectacularly wrong investing book ever” from the Washington Post. However, the book’s core message that long-term stock investing beats bonds has held up.
His economic philosophy: Hassett advocates for lower taxes, deregulation, and supply-side economics. Most importantly for markets, he’s perceived as having “dovish leanings” which means he favors lower interest rates and prioritizes economic growth over strict inflation control.
Why It Matters: What Hassett Would Mean for Markets
The potential appointment of Kevin Hassett signals three major changes to how the Fed might operate:
1. Lower Interest Rates, Faster
Hassett has been vocal about his belief that the Fed should cut rates more aggressively. In a November 2025 interview, he stated he would implement rate cuts if he were Fed Chair, suggesting Powell’s Fed was “a little bit late to the game.”
Currently, the Fed’s benchmark rate sits at 3.75% to 4% after two quarter-point cuts in September and October 2025. Hassett’s appointment would likely accelerate the pace of cuts, potentially bringing rates closer to 2.5% to 3% by late 2026.
What this means for you:
- Stocks would likely rally on expectations of cheaper borrowing costs
- The U.S. dollar could weaken as lower rates make dollar-denominated assets less attractive
- Gold might surge as a hedge against dollar weakness
- High-yield bonds and risky assets would benefit from “easier money”
2. Potential Loss of Fed Independence
The Federal Reserve was designed to operate independently from political pressure. That independence is considered sacred by economists and market participants because it allows the Fed to make unpopular decisions (like raising rates) when necessary to control inflation.
Hassett’s close relationship with Trump raises serious questions. Trump has made no secret of wanting more control over Fed policy, and Hassett is seen as someone who would align with the president’s preference for low rates, even if inflation remains above target.
The risk: If markets perceive the Fed as beholden to political interests rather than economic data, it could:
- Increase inflation expectations
- Raise long-term interest rates (bond yields) as investors demand higher returns to compensate for risk
- Weaken the dollar’s status as the world’s reserve currency
- Cause volatility across all asset classes
3. Policy Shift on Inflation Targeting
Under Powell, the Fed has maintained that it won’t cut rates until inflation consistently trends toward its 2% target. As of September 2025, inflation stood at an elevated 3%.
Hassett’s appointment could signal a shift away from strict inflation targeting. Some analysts believe he might support eliminating or modifying the Fed’s “average inflation targeting” framework, which could mean tolerating higher inflation in exchange for stronger job growth and economic expansion.Translation for traders: A Hassett-led Fed might be willing to live with 2.5% to 3% inflation if it means keeping unemployment low and growth strong. This would be bullish for risk assets (stocks, crypto, commodities) but bearish for bonds and the dollar.
The Calendar: Key Dates to Watch
Here’s your timeline for this potential Fed leadership change:
📅 December 10, 2025: Next Fed Rate Decision
Powell’s Fed will likely cut rates another 0.25% to a range of 3.5% to 3.75%. Markets are pricing in a 75% chance of this cut after recent dovish comments from Fed officials.
Before December 25, 2025: Trump’s Announcement (Expected)
Treasury Secretary Bessent said there’s a “very good chance” Trump announces his Fed Chair pick before Christmas. This could happen as early as mid-December.
Senate Confirmation (Timeline TBD)
Once Trump nominates the next Fed Chair, the Senate must proceed to confirmation. This process typically takes 2-4 months, meaning it would likely wrap up before May 2026.
📅 May 15, 2026: Powell’s Term Expires
This is the official end of Powell’s chairmanship. The new Chair would take over, but Powell could remain as a Fed governor until January 2028 if he chooses.
The Bottom Line
Kevin Hassett’s potential appointment as Fed Chair represents a possible major shift in U.S. monetary policy toward easier money, lower rates, and potentially less independence from political influence.
What to expect if Hassett gets the job:
- More aggressive rate cuts throughout 2026
- A Fed more willing to tolerate higher inflation
- Potential dollar weakness as rates fall faster than in other countries
- Increased volatility as markets adjust to a new policy regime
- Questions about Fed independence that could periodically spook markets
The person who runs the Fed matters enormously, as interest rates touch everything, from your mortgage to stock valuations to currency exchange rates. A dovish, politically aligned Fed Chair like Hassett would mark a major departure from the data-driven, inflation-focused approach of recent years.
In turn, this shift will likely create both opportunities and risks. Stay informed, understand the implications, and remember that markets tend to get messy with uncertainty.
Disclaimer: This article is for educational purposes only and should not be considered financial or investment advice. Trading involves substantial risk of loss and is not suitable for every investor. The views expressed are based on current market information as of November 2025 and may change as new information becomes available. Always conduct your own research and consider consulting with a qualified financial advisor before making investment decisions.