In an interview with Politico, Trump confirmed that lowering borrowing costs will be a “litmus test” for the next Fed chair, responding with a direct “yes” when asked if his nominee must support rate cuts right away.
“We’re fighting through interest rates,” Trump said, sharply criticising current Fed Chair Jerome Powell, whom he called “not a smart person” and “someone who doesn’t like Trump.” Powell’s term ends in May 2026, and the White House has already begun interviews for his replacement, led by Treasury Secretary Scott Bessent.
Kevin Hassett Seen as Frontrunner
Among the top contenders are Fed Governors Christopher Waller and Michelle Bowman, former Fed Governor Kevin Warsh, BlackRock executive Rick Rieder, and White House economic adviser Kevin Hassett — who is widely viewed as the frontrunner.
Hassett, who chaired Trump’s Council of Economic Advisers during his first term, has been one of the administration’s strongest voices for lower rates. Speaking Tuesday at the Wall Street Journal CEO Summit, Hassett said there is “plenty of room” to ease borrowing costs and described the US economy as being in “a potentially extremely transformative time.”
Polymarket data shows a 77% probability that Trump will nominate Hassett to succeed Powell, according to CoinGape.
Fed Meeting and Market Context
The comments come just as the Federal Reserve convenes its final meeting of 2025, with investors expecting a quarter-point rate cut, the third this year, bringing the benchmark rate down to 3.50%-3.75%.
However, Trump has repeatedly argued that the Fed is moving too slowly, insisting that deeper cuts are needed to sustain growth and offset the impact of tariffs and fiscal tightening.
Crypto and bond traders are already speculating about how many cuts may follow in 2026. Polymarket data indicates a 23% chance of three rate cuts next year, with some wagers betting on four or more, depending on inflation trends and Trump’s influence over the central bank.
Trump’s Expanding Influence Over the Fed
If Hassett is nominated and confirmed, Trump would gain significant sway over the Federal Open Market Committee (FOMC), which already includes three rate-cut advocates — Waller, Bowman, and Stephen Miran.
Still, Trump would need to secure one additional Fed board seat to hold a majority, as Powell’s board term runs until 2028 even after his leadership role ends. Analysts note Powell could step down once replaced, as several former chairs have done.
The Bigger Picture
Trump’s remarks underscore his determination to reshape the Fed in his image — one favoring aggressive stimulus and rapid monetary easing.
With inflation cooling and economic growth steady, his call for immediate cuts sets up a potential clash with Powell and other Fed officials who have warned against moving too fast.
As the president prepares to announce his nominee early next year, markets are already adjusting to a new era of Trump-driven monetary policy, where rate cuts may become the defining measure of loyalty at the nation’s central bank.
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