00:00It appears the race for the next Fed chair is down to two.
00:03While talking to the Wall Street Journal, the president named Kevin Hassett and Kevin Warsh as his top two choices.
00:10Policy, polymarket, I should say, polymarket odds had Hassett as the clear frontrunner,
00:15but Warsh is closing the gap considerably.
00:18Here with me now is Michael McKee, Bloomberg International Economics and Policy Correspondent.
00:22And I know mystery is a big part of the strategy of this administration.
00:27But previously, the president said he knew who he was choosing.
00:30He had his pick.
00:31Yeah, well, I have to remind you, this president is Donald Trump, and he never does anything in a straight line, shall we put it that way.
00:39He did tell the Journal that he is thinking of both Kevins, and he did interview Kevin Warsh again last week.
00:45But that doesn't mean he's not going to be interviewing other people, as far as we know.
00:50There was some talk of a whole second round of interviews.
00:53And he has given us conflicting data on when he intends to name a choice.
00:59Now, the question is, between the two of them, what is the difference, or does it really matter?
01:05Kevin Warsh, probably more hawkish.
01:07Kevin Hassett has a reputation, perhaps, as being in the president's pocket.
01:11But they both will come to a Fed that already has a lot of people in place who may not want to do what they want to do.
01:19You look at who was appointed. Hassett or Warsh would be appointed by Trump, along with the Mickey Bowman vice chair and the governor, Chris Waller, if he's not chosen as chair.
01:32But the rest of them all were appointed by other presidents.
01:36And I left Powell in there because we don't know if he's going to quit yet.
01:39And so how much influence is the new chair going to really have, at least in the short run?
01:45He will have some opportunities.
01:46Jay Powell has three more rate meetings before he leaves.
01:51But the new chair will have five.
01:54So it is going to be June 17th that everybody's going to be focused on once we get the name and they get in place.
02:00June 17th, the first Fed meeting with that person as chair.
02:04That's why the odds jump considerably of a rate cut in June.
02:08If you look at the WIRP function on the terminal, all of a sudden it goes from like 20 to 50.
02:12I wonder what you make of Scott Bessent has talked about having regional Fed presidents, you know, actually live in that district and have a three year period of residency there.
02:25That could change the makeup of the regional Fed presidents, although he says it would take an act of Congress.
02:31How much further can President Trump, can this administration shake up the Fed?
02:37Well, that's going to depend on the court case before the Supreme Court on Lisa Cook, because if the president's given permission to fire at will, then he could get rid of other governors and appoint new people.
02:48And he could also get rid of members of the boards of directors of the local regional Fed banks and their presidents and try to influence it that way.
02:59But it isn't clear that that would get very far under the law.
03:04We've got to wait for the Supreme Court to decide.
03:07And then, as you say, the idea of putting residency requirements or any other requirements in would require Congress to modify the Federal Reserve Act.
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