Hassett Seen as Frontrunner in Fed Chair Search

Watch Hassett Seen as Frontrunner in Fed Chair Search - Bloomberg on Dailymotion

Transcript

00:00And what is it specifically about Kevin Hassett that makes him a more attractive candidate over

00:04some of the other front runners? Well, clearly, Mr. Hassett is seen as being aligned with President

00:10Trump in terms of their views on the economy, in terms of their views on monetary policy and

00:14interest rates. And indeed, Mr. Hassett has been vocal in his views on how the Fed needs to change

00:19up and shake up its operations. He's criticized him in the past, for example, for missing the

00:24inflation outbreak after the pandemic and so on. Now, to be clear, of course, the president has not

00:30yet made any public announcement on this. The White House has told my colleagues to stay tuned to

00:36President May. We don't yet know what his final decision will be. And the interviews, of course,

00:40for the Fed chair are ongoing. But as you say, our colleagues are reporting out that among those

00:45candidates, the chair of the NEC, Mr. Hassett, appears to be the clear favorite right now.

00:49Hey, and, you know, this is just one voting number. Certainly the Fed chair is very powerful

00:54in terms of the way that the Fed chair communicates, not just to the investing public, but to

00:58the general public. What power would Hassett have to actually put President Trump's policies

01:05into effect? Well, obviously, significant power and authority. Number one, he could help reshape

01:11and remold the Fed in the way that the Trump administration wants it to be. We know there's been

01:15criticism of it, for example, too many staff, the way they approach research. They're thinking

01:21on monetary policy and where interest rates need to be. So there's lots of kind of institutional

01:25change that the next Fed chair could push through. And then, of course, in the broader economy,

01:30the next chair could adopt a narrative of one being perhaps it's less time. Now is not the time

01:35to be worrying about inflation per se. We need to be more worried about the jobs market and bring

01:39down interest rates and borrowing costs as a result. So there's huge scope or shape in the narrative.

01:44But also to be clear, Tim, to your point, it also depends how the economy is doing. If we're in an

01:49economy where, for example, inflation does continue to head back towards the Fed's 2% target

01:53and let's say the labor market is softening, then, of course, the Fed will have an opening to bring

01:58down borrowing costs. But if it's the opposite and inflation remains persistent, if not continuing to

02:02move higher, then that will make that job very tricky indeed. So while there's scope for significant

02:07influence for next Fed chair, the economy will also dictate where policy goes. Yeah, and it's going to put

02:12the idea of Fed independence really to the test. So, and give us a sense of the timing here. We know

02:18that the president has been talking about wanting to get a new Fed chair. But my understanding is that

02:24Fed Chair Jay Powell's term as chair of the Federal Reserve doesn't end until May 2026. How quickly could

02:30Kevin Hassett, if he is the frontrunner, be put into the FOMC? Yeah, well, so Treasury Secretary Scott Bestin,

02:37who's running the process, he's guided Scarlett that they have five candidates right now. They're in the process of

02:42the final interviews for those candidates. Then after Thanksgiving, a kind of a shortened finalist will go to the

02:48president. And by Christmas, it's possible that we'll have an announcement from President Trump, if not sooner.

02:53That's the mechanics of it. And then to your point, current Fed chair Powell, he's in the job until May anyway. So we will then have

03:01several months for the confirmation process by the Senate to go over whoever the next candidate might

03:07be, to, you know, the pros and cons of who that might be, and to get that position confirmed and in place to be up and

03:13running in May. So it depends how quickly President Trump makes the announcement. And then from there, we'll go to that

03:18Senate confirmation process. And that all builds up to the handover in May.