Ahead Of Fed Meeting Outcome, Kevin Hassett Signals Openness To Deeper Rate Cuts

• Prediction markets and polls show Hassett leading the race to replace Powell.
• Questions over Fed’s independence grow amid tensions between Trump and Powell.
• Markets are pricing in a 25-basis-point cut on Wednesday.

White House National Economic Council Director Kevin Hassett reportedly said on Tuesday that he sees “plenty of room” for the Federal Reserve to cut interest rates and would support reductions larger than 25 basis points if economic data justified it. 

Speaking at The Wall Street Journal CEO Council Summit, the frontrunner to become U.S. President Donald Trump’s next Fed chair confirmed he believes deeper cuts are possible, according to a Bloomberg report.

Hassett said he would rely on his own judgment rather than political loyalty, even as Trump has made rapid rate cuts a key litmus test for selecting a new chair.

Growing Expectations For A Hassett Nomination

A Stocktwits poll of 19,000 users showed 53% expect him to be Trump’s choice, while Kalshi puts the odds at 77%. Powell, whose term ends in May, received only 26% support in the same poll. Polymarket shows 89% odds of no announcement before December, with Hassett still leading individual contenders.

Trump has privately indicated he has narrowed the field to about 10 candidates but hinted last week that Hassett is his preferred pick.

Tensions With Powell 

Powell could legally serve another term, but relations with Trump have been strained, with the president referring to him as “Too Late Powell.” Hassett’s close alignment with Trump has raised concerns about whether he would maintain the Fed’s political independence.

Hassett has publicly criticized the central bank’s recent policy decisions, accusing the Fed of acting politically, even as he emphasized a “very strong” working relationship with Powell. If nominated, he would initially fill the Fed board seat vacated by Stephen Miran and would serve under Powell for several months before taking the chair.

Markets expect another 25-basis-point cut at next week’s FOMC meeting, with the CME FedWatch assigning an 89.6% probability. Major banks, including Morgan Stanley, JPMorgan, and Bank of America, now expect a December cut as well, reversing earlier expectations for a pause.

Hassett’s Policy Vision

Hassett argues that rapid advances in artificial intelligence mirror the productivity boom of the 1990s, giving the Fed room to keep rates low despite tight labor markets. 

He said AI’s increase in productivity could lift potential GDP growth “way north of 3%” and possibly above 4%. He added that lower rates could boost both supply and demand as new investments accelerate.

How Did Stocktwits Users React?

On Stocktwits, sentiment for the SPDR S&P 500 ETF (SPY) was ‘neutral’ with ‘normal’ message volume, the Invesco QQQ Trust (QQQ) showed ‘bearish’ sentiment with ‘low’ volume, and the SPDR Dow Jones Industrial Average ETF (DIA) reflected ‘bullish’ sentiment with ‘normal’ volume.

So far this year, SPY is up 18%, QQQ is up 23%, and DIA is up 14%.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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