Source: Jinshi Data
White House economic adviser Kevin Hassett indicated that Trump is likely to keep him in his current position, which would remove him from the running for the next Federal Reserve Chair.
"From the beginning, he and I have been discussing whether I am better off in the West Wing or at the Fed," Hassett said on Fox News' "Sunday Briefing." "I don't think he has made a final decision on this yet."
Last week, Trump expressed reservations about nominating Hassett to replace current Fed Chair Powell. During an event at the White House, he told the director of the National Economic Council: "To be honest, I actually want you to stay where you are."
Hassett was once considered one of the top contenders, alongside Fed Governor Christopher Waller, former Governor Kevin Warsh, and BlackRock executive Rick Rieder. According to informed sources, it is currently seen as a four-person race, with Rieder's candidacy gaining late momentum as some believe he might have a better chance of confirmation by the U.S. Senate.
After Trump's remarks, traders on the prediction market site Kalshi raised the probability of Warsh getting the job to 60%, while Hassett and Waller's chances were only 16% and 14%, respectively. Traders on Polymarket showed a similar trend, with Warsh at 60%, Hassett at 15%, and Waller at 13%. Previously, Warsh and Hassett had been neck and neck.
Krishna Guha, head of global policy and central bank strategy at Evercore ISI, wrote: "Unclear if this is a definitive signal—the President has sent various signals at different times and seems to enjoy the drama of this 'Celebrity Apprentice season'—but it looks like the former Fed governor is the clear front-runner for the first time."
A criminal investigation into the Fed and its Chair Powell regarding the renovation of the central bank's headquarters has introduced new uncertainty into the selection process and sparked a wave of backlash.
Powell accused the Justice Department of initiating the investigation to pressure the central bank into cutting interest rates. Key lawmakers, including Senate Banking Committee member Thom Tillis, warned that scrutiny of Trump's nominees would be more rigorous.
Although Trump claimed to "know nothing" about the investigation, the Justice Department's move, coupled with Trump's relentless pressure on Powell and the Fed to lower interest rates, has reignited broad concerns about the central bank's independence from political interference.
Axios reported on January 12 that Treasury Secretary Mnuchin had warned Trump that the investigation had caused chaos and could be detrimental to financial markets.
While Mnuchin declined to comment on Axios' report on NBC's "Meet the Press," he cited last week's U.S. Treasury auction as evidence that "the market is moving past this."
Although the U.S. Treasury market was relatively stable last week, Treasury yields fell on Tuesday and Wednesday.
Mnuchin told NBC he is not concerned that the Senate might block Trump's eventual nominee for Fed chair.
"I think we will move forward," he said. "I believe we may soon hear from the banking committee about what they want to see."
Mnuchin told NBC News that the Senate would be "very satisfied" with any of the four "great" candidates the Trump administration is considering to replace Powell. Mnuchin called for oversight of the Fed, noting that the agency can print its own money.
Powell's term as Fed chair ends on May 15. The selection process is led by Mnuchin.
"There are many excellent candidates, and the president may well make the right decision that my best place is here [the White House] for now," Hassett said last Sunday regarding the White House.
He said he felt "flattered and grateful" for Trump's comments about his future, calling the president "such a good guy."
Trump said he would appoint Powell's successor this month but did not provide a specific date.
