Front-Runner For Next Fed Chair Kevin Hassett Says It ‘Needs To Be Independent’

• He voiced concerns that when the Fed loses its independence, inflation goes out of control that ultimately hurts ordinary people.
• He also said that U.S. President Donald Trump wants an independent Fed.

National Economic Advisor Kevin Hassett, a front-runner to become next Federal Reserve chair said on Thursday that the Fed needs to be independent in light of the probe against incumbent chair Jerome Powell. 

“When the Fed loses its independence, inflation goes out of control and it hurts ordinary folks, we can’t ever let that happen,” he said in an interview on Fox Business. He also said that U.S. President Donald Trump wants an independent Fed. 

Hassett also rejected concerns that he would lack the ability to swing other central bankers behind his views if he gets the job. “I am tough enough to win an argument,” the candidate said.

Concerns Over Fed Independence

Recent criminal proceedings against current Fed chair Jerome Powell have raised concerns over the Fed losing its independence. The Fed chair is subject of a criminal investigation by the U.S. Department of Justice over the testimony he delivered to the committee in June on a $2.5 billion renovation of the Fed’s Eccles Building.

Powell have since has gained support from global central bankers including Christine Lagarde, President of the European Central Bank, Andrew Bailey, Governor of the Bank of England, and Erik Thedéen, Governor of Sveriges Riksbank, among others.

The 11 bankers stressed the importance of the independence of central banks to the country’s economy, calling it a “cornerstone” of price, financial, and economic stability in the interests of the citizens they serve.

Next Fed Chair

U.S. Secretary of the Treasury Scott Bessent recently said that he thinks Trump will decide the next Fed chair in January. 

A report from the New York Times last week said that the U.S. President Donald Trump has made up his mind on who will be the next chair of the Federal Reserve.

Donald Trump has been critical of current Federal Reserve chair Jerome Powell and has been pressuring him to lower interest rates ever since he took office.

Market Reaction

U.S. equities rose on Wednesday. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.01% in after-hours of trading. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bullish’ territory.

The Invesco QQQ Trust ETF (QQQ) was also down 0.1%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 0.03% in after-market hours.

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