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As Trump weighs his next Fed chair pick, a leading contender is drawing a firm line on political influence.
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Kevin Hassett’s remarks have put Fed independence back in focus, keeping markets on edge.
Kevin Hassett, a leading contender for the next US Federal Reserve chair, has stated that the central bank does not take instructions from the White House and that Donald Trump’s views on interest rates will not shape monetary policy. Hassett said the Federal Reserve is designed to operate independently and bases its decisions on economic data rather than political pressure.
He emphasized that interest rate decisions are made collectively by the Federal Open Market Committee (FOMC), not by the president or any single official. The comments come as markets closely watch the race to lead the Fed amid concerns over political influence.
Fed Chair Race Narrows Between Hassett and Warsh
The contest to succeed current Fed chair Jerome Powell is tightening. Trump recently confirmed that two candidates named Kevin are leading the race: Kevin Hassett and former Federal Reserve governor Kevin Warsh. While Trump has hinted that Warsh may currently be his preferred option, both remain strong contenders.
Prediction markets reflect the shifting dynamics. Hassett previously led the odds by a wide margin, but Trump’s recent remarks have narrowed the gap, increasing uncertainty around the final decision. This has kept investors across traditional finance and crypto markets on alert.
Trump’s Views on Interest Rates, But No Direct Control
Donald Trump has repeatedly expressed support for lower interest rates and has said future Fed leaders should consult with him on monetary policy. Hassett acknowledged that discussions with the president can occur but drew a firm distinction between consultation and control.
According to Hassett, even strong arguments from the White House do not override the Fed’s structure. Policy decisions depend on how the FOMC evaluates inflation, employment, and economic data, followed by a committee vote rather than executive direction.
Recent Fed Rate Cut Triggers Limited Market Reaction
The Federal Reserve recently announced a 25-basis-point rate cut, but markets showed little reaction. Equity markets remained stable, while crypto prices traded mostly flat following the decision. The muted response suggests traders are waiting for clearer policy signals rather than reacting to individual rate moves.
Powell has described the current economic environment as difficult to navigate. Inflation risks remain, while pressure in the labor market is building, limiting how aggressively the Fed can ease policy in the near term.
Debate Over Federal Reserve Independence
Hassett’s comments have sparked debate within the crypto and financial communities. Crypto market commentator Edge of Power questioned whether the Fed can remain fully independent while acknowledging the president’s strong views on monetary policy. The remarks have fueled speculation about informal political influence behind closed doors.
Analysts Defend Hassett’s Track Record
Others argue that concerns over Fed independence are overstated. Analyst Rubén Anguiano highlighted Hassett’s academic background, experience working with the Federal Reserve, and consistent reliance on data-driven analysis. According to Anguiano, Hassett has supported interest rate cuts only when inflation conditions allow and has repeatedly defended the Fed’s independence.
As the decision on the next Federal Reserve chair approaches, markets are likely to remain sensitive to any signals on policy direction, leadership choices, and the future path of US interest rates.