Trump’s Federal Reserve Strategy: Hassett’s Proposed Reductions Face Resistance from Central Bank Prudence

President Donald Trump is nearing a decision to select Kevin Hassett as his top choice to replace Jerome Powell as the head of the Federal Reserve, with the National Economic Council director signaling he would accept the role if offered. Hassett, known for advocating significant interest rate reductions, stated in a Bloomberg interview that he favors a 50 basis point cut to the Fed’s key rate at the December meeting,

. The president, who has openly faulted Powell for hesitating on rate cuts, , though he withheld specific names. Treasury Secretary Scott Bessent, who is overseeing the selection process, has narrowed the field to a shortlist that includes Hassett, current Fed Governor Christopher Waller, and Rick Rieder from BlackRock .

Hassett’s possible nomination highlights Trump’s desire for a Fed leader who aligns with his economic agenda. During his interview, Hassett stressed his readiness to challenge the Fed’s present policies, which he claims have become “uncomfortably aligned with partisan interests.”

for not utilizing advanced forecasting methods and vowed to revamp it if chosen. His comments stand in contrast to Powell’s more measured approach, which has focused on safeguarding the Fed’s independence despite Trump’s calls for rate cuts.

The political dynamics surrounding the nomination are still complicated.

, pointing out that rushing the process might result in “a prolonged and contentious confirmation battle.” He referenced his bipartisan confirmation in 2017 as a possible strength, but acknowledged that today’s heightened polarization makes the process more difficult. At the same time, Trump has encountered pushback from within his team about removing Powell right away, before Powell’s term ends in May 2026 could be destabilizing.

The Federal Reserve itself is facing a tricky situation. Some members, such as Governor Christopher Waller, are pushing for rate reductions due to a softening job market, while others, including Cleveland Fed President Beth Hammack, believe policy should stay “somewhat restrictive” to fight ongoing inflation

. The central bank’s decision in December will depend on whether the latest economic indicators support a change, or maintain them.

Trump’s advocacy for a more accommodative Fed fits with his broader economic strategy, which also involves reducing tariffs and tackling inflation. Hassett, who has previously been on the Fed’s board, describes his approach as a mix of market-oriented reforms and structural changes aimed at lowering costs for consumers

. Still, critics such as economist Ryan Cummings warn that Trump’s emphasis on immediate rate cuts without addressing deeper issues in housing, healthcare, and education affordability.

As the administration nears a final decision, whoever is chosen will need to balance Trump’s expectations with the Fed’s responsibility to maintain long-term economic health.

, the administration’s next step will have a lasting impact on U.S. monetary policy.