Hassett’s Fed Chair Bid Faces Internal Doubts

As the race to replace Jerome Powell as Federal Reserve Chair intensifies, significant internal debate has emerged within the White House regarding the suitability of the current frontrunner. Kevin Hassett, presently serving as the Director of the National Economic Council (NEC), is facing scrutiny from administration insiders who question whether he possesses the requisite authority to lead the world’s most influential central bank.

While President Trump deliberates on this pivotal economic appointment—arguably the most significant of his second term—detractors argue that Hassett has functioned more as a messenger than a policy architect. With Jerome Powell’s term concluding in May, the stakes for global markets are exceptionally high, particularly as the US economy grapples with rising unemployment and persistent inflationary pressures.

Sources familiar with the administration’s internal dynamics suggest that while Hassett is a polished public communicator, his influence on tangible policy has been limited. Critics within the West Wing have characterised his role in major initiatives, such as the recently implemented trade regimes, as that of a "spectator".

Unlike past NEC directors who served as central hubs for interagency coordination, Hassett is viewed by some as having taken a back seat to other heavyweight officials. Figures such as Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick appear to be the primary drivers of the administration’s aggressive economic strategies. One insider remarked that while Hassett is effective at defending the President in the media, leading the Federal Reserve requires a different skill set—specifically, the ability to drive consensus among policymakers rather than simply broadcasting an agenda.

This perception of passivity raises concerns about how Hassett would manage the Federal Open Market Committee (FOMC). The role of Fed Chair demands a strong leader capable of managing competing voices on monetary policy, a task distinct from the advisory nature of the NEC.

The debate over the next Fed Chair arrives at a fragile moment for the American economy. The US Department of Labor recently reported an unemployment rate of 4.6 per cent for November, the highest level in four years. While growth remains robust, the dual threat of softening labour markets and inflation exceeding the Fed’s targets has created a complex environment for monetary policy.

Supporters of Hassett argue that his academic credentials and history as a researcher make him a robust candidate. Altimeter Capital CEO Brad Gerstner noted that Hassett provides "thoughtful and mature" contributions and was instrumental in shaping tax policies and investment vehicles. Cabinet members, including Agriculture Secretary Brooke Rollins, have also praised his acumen in coordinating issues ranging from food prices to national security.

However, the President himself has indicated he is torn between Hassett and former Fed board member Kevin Warsh. Market analysts suggest that Warsh might be better positioned to execute an institutional overhaul of the Fed, whereas Hassett’s strength lies in his loyalty to the "MAGAnomics" agenda.

The ultimate choice will signal the administration's intent regarding the independence of the central bank. Trump has frequently criticised Powell for not cutting interest rates aggressively enough. Hassett has publicly aligned with this view, stating recently that there is "plenty of room" for the Fed to lower rates.

He has also criticised the Fed’s forecasting methodologies, suggesting that his prior experience as a staff economist at the bank gave him insight into "what’s good and bad about the way the Fed people think". This suggests that a Hassett chairmanship would likely prioritise forecast reform and greater transparency.

Conversely, insiders suggest that Kevin Warsh or Fed Governor Christopher Waller might command more respect within the institution, potentially finding it easier to build the necessary consensus for rate cuts. As the decision draws near, the tension between appointing a loyalist communicator versus a commanding institutionalist remains the central conflict defining the future of US monetary policy.