2025 Fed Chair Nomination: Trump Announces Decision on Jerome Powell's Successor

This analysis is based on the Bloomberg Television report [1] published on December 1, 2025, where President Trump announced his finalized Fed Chair pick aboard Air Force One. The current Fed Chair, Jerome Powell (a 2018 Trump appointee), will end his term in May 2026 [3]. Trump has previously criticized Powell for a cautious approach to cutting interest rates in 2025, setting the stage for a potential shift in monetary policy direction [2][3][4].

The selection process, overseen by Treasury Secretary Scott Bessent, narrowed candidates to five finalists: Kevin Hassett (current NEC Director, former Council of Economic Advisers Chair), Kevin Warsh (ex-Fed Governor), Chris Waller (Fed Board Member), Michelle Bowman (Fed Board Member), and Rick Rieder (BlackRock Executive) [2][3][4][6]. Kevin Hassett is widely considered the favored nominee, with prediction markets assigning a ~70% probability to his selection [5]. Markets reacted last week to reports of Hassett’s potential nomination, with the 10-year Treasury yield briefly falling below 4%, signaling expectations of looser monetary policy [2].

1. Policy Alignment and Market Expectations
   : Hassett’s history as a conservative economist supporting tax cuts and deregulation (during his 2017-2019 tenure as CEA Chair [0]) aligns with Trump’s demand for aggressive rate cuts, driving short-term market optimism [2][5].
2. Fed Independence Concerns
   : Trump’s repeated criticism of Powell and preference for a like-minded Fed Chair raises risks to the central bank’s historical independence—a cornerstone of U.S. monetary policy credibility [0].
3. Internal Fed Dynamics
   : The Fed is currently divided on interest rate policy, with disagreement over December 2025 rate cuts [2]. A new chair could either resolve or exacerbate these divisions, depending on their policy approach.

• Inflation Resurgence
  : Aggressive rate cuts under a new chair could reignite inflation, which the Fed has reduced from 2022 peak levels through tight monetary policy [0].
• Eroded Fed Independence
  : A politically aligned chair may undermine investor confidence in data-driven monetary policy, increasing market volatility [0].
• Confirmation Uncertainty
  : The Senate confirmation process (required for the Fed Chair) could delay policy alignment, creating short-term market uncertainty [0].

• Short-Term Market Gains
  : Immediate market optimism is likely if Hassett is confirmed, as investors price in expected rate cuts [2].
• Economic Stimulus
  : Rate cuts could boost consumer spending and business investment in the short term, supporting economic growth [0].

• Event: Trump announced finalized Fed Chair pick on December 1, 2025, aboard Air Force One [1].
• Current Fed Chair: Jerome Powell’s term ends May 2026 [3].
• Presumptive Nominee: Kevin Hassett, with ~70% prediction market probability [5].
• Market Reaction: 10-year Treasury yield briefly fell below 4% last week on Hassett nomination reports [2].
• Information Gaps: Exact nominee identity, specific monetary policy plans, and Senate confirmation timeline remain undisclosed.

All analysis is conducted without prescriptive investment recommendations, focusing on objective market and policy context.