Fed Chair Race Reopens As Trump Allies Question Hassett’s Independence And Promote Warsh: Report

• Trump insiders have reportedly expressed concern that markets could react negatively if Kevin Hassett is seen as too closely aligned with the White House.
• Kevin Warsh has gained traction as a rival candidate, with Trump signalling both remain top contenders and prediction markets shifting sharply.
• The renewed uncertainty comes as Trump presses candidates on rate cuts and reiterates frustration with current Fed leadership.

Kevin Hassett’s candidacy to succeed Jerome Powell as Federal Reserve chair has reportedly met resistance from senior figures close to U.S. President Donald Trump, complicating what markets had viewed as a near-certain appointment.

The concerns centre on Hassett’s close ties to Trump. While that relationship initially helped elevate the National Economic Council director to frontrunner status, some advisers worry it could undermine perceptions of Fed independence and eventually unsettle bond markets if investors view him as too closely aligned with the White House, according to a CNBC report, citing sources familiar with the matter.

Warsh Emerges As Rival

The pushback has supposedly largely taken the form of promoting former Fed governor Kevin Warsh rather than directly criticising Hassett. That shift may help explain why interviews with candidates were cancelled in early December and later resumed, at least in Warsh’s case, last week.

Trump reinforced the uncertainty in comments to The Wall Street Journal, saying Warsh now sits alongside Hassett at the top of his shortlist. “You have Kevin and Kevin,” Trump said, calling both strong options and noting there are a few other contenders. The remarks surprised investors after Trump had recently suggested he had already made a decision.

Following Trump’s comments, prediction markets shifted sharply. On Kalshi, Hassett’s odds fell to about 51% on Monday, down from above 80% earlier in the month, while Warsh’s rose to roughly 44% from around 11% at the start of December. 

Bond Market And Independence Concerns

As December progressed, several advisers grew concerned that markets could ultimately react negatively if Hassett were perceived as too close to Trump. Some warned that such views could push long-term yields higher on fears the Fed might not act forcefully enough to contain inflation if it were to rebound, the report said. 

Trump Focuses On Rates

Trump has made interest rates central to the selection process. He said he held a roughly 45-minute meeting with Warsh and pressed him on whether he would support rate cuts if appointed. Trump said Warsh favours lower rates and added that most advisers he has spoken to share that view.

Trump’s comments followed the Fed’s latest policy decision, with officials cutting rates by a quarter point to a range of 3.5% to 3.75%, the third cut this year. The decision drew three dissents, the most since 2019. Policymakers cited a cooling labour market and inflation that remains above desired levels, signalled only one additional rate cut in 2026.

Final Interviews Under Way

A final round of interviews is reportedly ongoing. Treasury Secretary Scott Bessent has spoken with Hassett and has also interviewed Fed governors Christopher Waller and Michelle Bowman, both appointed during Trump’s first term. Hassett previously served as a senior economic adviser from 2017 to 2019, returned briefly during the Covid-19 pandemic, and became head of the National Economic Council earlier this year. Warsh, a former Wall Street executive and adviser in the George W. Bush administration, served as a Fed governor from 2006 to 2011 and was interviewed for the role in 2017 before Powell was selected.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment was ‘bullish’ for the SPDR S&P 500 ETF Trust (SPY) and the SPDR Dow Jones Industrial Average ETF Trust (DIA), while sentiment was ‘bearish’ for the Invesco QQQ Trust (QQQ). Message volume was described as ‘normal’ for SPY and QQQ, while DIA saw ‘high’ message volume.

While SPY is up 17%, QQQ has risen 20%, and DIA has climbed 15% so far this year.

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

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