Trump’s favourite for Fed chair gets a cool reception from Wall Street

Donald Trump’s search for a new chairman of the Federal Reserve seemed to reach a conclusion last week — at least until Wall Street lobbying against his presumed choice put the announcement on ice.

- Matthew Bishop

At a White House event on Tuesday, the president appeared to anoint Kevin Hassett, his current chief economic adviser, whose probability of being selected soared to 85% on the Polymarket betting site, up from 15% a week earlier.

But yields on US Treasury bonds quickly rose on fears that Hassett would be soft on inflation, and prominent financiers reportedly complained in private to treasury secretary Scott Bessent. Now it seems that no final decision will be made until early next year. By Friday, Hassett’s Polymarket probability had slipped to 73% — still favourite but slightly less so.

Trump hates the independence of America’s central bank, especially its current refusal to cut interest rates as fast as he would like to boost the economy. He wants to replace the current chairman, Jerome Powell, whom he regularly insults on social media, with someone more obliging.

His pick will have profound implications for the average American. One tribe of Fed officials, mostly Trump appointees, are raising the spectre of a slowdown in the US job market and are calling for more aggressive rate cuts, following an expected quarter-point cut next week.