President Donald Trump indicated on Friday that he is reconsidering his choice of Kevin Hassett for the Federal Reserve leadership, primarily due to concerns about losing a key economic spokesperson within the White House.
Trump shared these thoughts during a healthcare event at the White House, addressing Hassett directly. Hassett currently serves as the head of the National Economic Council and had been considered a leading candidate to succeed Jerome Powell as the head of the Federal Reserve.
“I actually want to keep you where you are, if you want to know the truth,” Trump told Hassett. “If I move him, these Fed guys, certainly the one we have now, they don’t talk much. I would lose you. It’s a serious concern to me.”
Following Trump's remarks, the U.S. dollar rebounded from earlier declines, while stock markets experienced a downturn.
The financial markets reacted to Trump’s comments, with government bonds experiencing a sell-off. Investors subsequently lowered their expectations for the number of interest rate cuts the Federal Reserve would implement in 2026. The yield on two-year Treasury notes rose by five basis points, reaching 3.61%, its highest level since the Federal Reserve's last rate reduction in December.
Trading in short-term interest rate futures indicated that investors were anticipating fewer opportunities for two quarter-point rate cuts from the Fed this year, a shift attributed to Trump’s statements regarding Hassett.
In currency markets, the dollar recovered from its session lows, while equity indexes moved into negative territory.
Trump had previously stated his intention to select a nominee who supports lowering interest rates, and market participants had perceived Hassett as aligning with this objective.
Trump's efforts to fill Federal Reserve vacancies have encountered obstacles in the Senate. Senator Thom Tillis, a prominent Republican on the Banking Committee, announced that he would not support any of Trump's nominees until a Justice Department investigation into the Federal Reserve concludes. Other Republican senators have also expressed opposition to the probe.
The issuance of a subpoena to the Federal Reserve intensified the conflict between the Trump administration and the central bank regarding policy decisions. Powell strongly criticized the probe, characterizing it as a thinly veiled attempt by the White House to compromise the Fed's independence. Administration officials, however, maintain that the inquiry is necessary to ensure the proper stewardship of taxpayer funds.
Trump did not address the controversy on Friday but reiterated that his decision is not yet final. He has recently indicated that he expects to announce his choice for Fed chair in the coming weeks.
“We don’t want to lose him,” Trump commented about Hassett. “We’ll see how it all works out.”
Key Candidates for Federal Reserve Chair
Towards the end of last year, Trump's advisors viewed Hassett as the leading candidate for the position. However, Trump has continued to consider other individuals for the role. In a recent interview with Reuters, Trump mentioned that he was considering both Hassett and former Fed Governor Kevin Warsh, among other potential nominees.
“The two Kevins are very good,” Trump stated. “You have some other good people too.”
Rick Rieder, an executive at BlackRock, visited the White House on Thursday. Fox Business reported that he interviewed for the position with the president and senior staff.
Jerome Powell's current term is set to expire on May 15. Treasury Secretary Scott Bessent is overseeing the search process. Trump has stated that Bessent has withdrawn himself from consideration for the role.
Hassett Addresses Federal Reserve Investigation
On Friday, Hassett attempted to downplay the ongoing criminal investigation into Powell, expressing his expectation that there would be "nothing to see here."
The administration initiated a criminal probe into Powell concerning cost overruns associated with a $2.5 billion project to renovate two older buildings at the Fed's headquarters. Powell disclosed the investigation on Sunday and has denied any wrongdoing, suggesting that the actions were intended to pressure him into lowering interest rates more significantly than Trump desires.
Hassett, who is being considered as a potential successor to Powell, informed Fox Business Network that he wished the Fed had been more transparent regarding the escalating renovation costs.
“The bottom line is, I expect, you know, Jay is a good man, I expect that there’s nothing to see here, that the cost overruns are related to things like asbestos, as he says. But I sure wish they had been more transparent,” Hassett remarked.
The probe has drawn criticism from international economic officials, investors, and former U.S. government officials from both major political parties. Even lawmakers within Trump's own party have expressed concerns that it blurs the lines between politics and sensitive policy-making.
Hassett characterized the criminal probe as a "simple request for information."
“I’m sure the information will be forthcoming shortly, and then things will move forward,” he added.