Fed, Trump holds again on Hassett. The race for governor reopens | EUROtoday

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“I’d prefer to maintain Kevin Hassett the place he’s, if you wish to know the reality. I might lose him and this can be a fear for me.” This is how Donald Trump praises his economic advisor who is one of the candidates for the presidency of the Fed. “We’ll see how it goes,” he then added, referring to the process of nominating the next president of the central bank, in a statement that does not definitively close the door on Hassett replacing Jerome Powell. Hassett’s ratings as head of the central bank have recently fallen: investors believe he is too close to Trump and his closeness could penalize him if the confirmation of Trump’s appointment to the Fed turns into a referendum on the independence of the central bank in Congress.

After President Trump said he would prefer to keep Hassett in his role as top economic adviser, former Federal Reserve governor Kevin Warsh has jumped into the lead in the race for central bank chairmanship, according to traders at market forecasting platform Kalshi. Warsh is now clearly ahead of main competitor Hassett. 

But the indices on Wall Street went negative after Trump announced that he wants to “maintain” Hassett where he is. The markets consider Hassett more accommodating and Warsh more “hawkish”. Warsh has often mentioned the inflation risk associated with accommodative monetary policy. Furthermore, he expressed skepticism towards aggressive quantitative easing. Instead, Hassett actively supports deeper rate cuts to stimulate growth and jobs.

Trump’s attempt to fill Fed vacancies is already running into obstacles in the Senate, which must confirm the president’s nominees. Sen. Thom Tillis, a key Republican on the Banking Committee, has vowed to oppose any of the president’s picks until the Justice Department’s investigation into the Fed concludes. Other Republican senators have also rejected the probe into Powell.

The determination to sue the Fed dramatically escalated the Trump administration’s battle with the establishment over its coverage selections. Powell condemned the investigation as a thinly veiled try by the White House to undermine the central financial institution’s independence. Administration officers have defended the investigation as a essential step to make sure the correct administration of public funds.