Trump’s Next Fed Chair: Markets Bet on Kevin Hassett While Economists Rally Around Chris Waller

Published December 3, 2025

As Donald Trump edges closer to naming the next chair of the US Federal Reserve, the contest has crystallised into a stark choice: Kevin Hassett, the president’s trusted economic lieutenant and the clear betting-market favourite, versus Christopher Waller, the career central banker many economists say is better suited to run the world’s most important central bank.

On December 2, Trump said he will unveil his pick “early next year,” tightening the timetable for a decision that could reshape US monetary policy, financial markets and the Fed’s independence for years. ^[1]

Trump says his Fed choice is made – and hints heavily at Hassett

Speaking to reporters and later at a White House event on Tuesday, Trump confirmed what markets had already assumed: his mind is made up on who will succeed Jerome Powell when Powell’s term as chair expires in May 2026. The announcement, he said, will come “early next year,” after months of auditions led by Treasury Secretary Scott Bessent. ^[2]

According to Reuters, Bessent has conducted multiple interview rounds with five finalists:

Kevin Hassett, director of the National Economic Council
Christopher Waller and Michelle Bowman, sitting Fed governors
Kevin Warsh, a former Fed governor
Rick Rieder, a senior BlackRock executive ^[3]

Trump has also been explicit about what he wants: a chair who favours lower interest rates. The US economy is still growing briskly and inflation is stuck around 3%—above the Fed’s 2% target—so a more dovish chair would immediately face pushback inside the central bank. ^[4]

But Trump repeatedly singled out Hassett on Tuesday, introducing him to guests as a “potential Fed chair” and praising him as a “respected” figure—precisely the sort of wink that markets treat as a near‑confirmation. ^[5]

Prediction markets: Hassett surges to overwhelming favourite

If the Fed chair were chosen by traders, the contest might already be over.

Online wagering platforms Kalshi and Polymarket now assign roughly 75%–85% odds that Hassett will get the job, up from around 50% or lower before Trump’s latest hints. ^[6]

Key signals behind the shift:

After Thanksgiving, Bessent said Trump would likely announce a nominee before Christmas and that five candidates were still in the running. Within hours, Bloomberg reported that Hassett had pulled ahead, and Polymarket’s odds for him jumped above 50%, more than double Waller’s. ^[7]
On Tuesday, Trump’s “potential Fed chair” remark at the White House sent odds even higher, to about 85% on Kalshi, according to crypto and prediction‑market coverage. ^[8]
A separate analysis noted that traders now treat Hassett as the near‑default outcome, with Waller the leading “alternative scenario” if Trump surprises markets. ^[9]

In other words: markets are trading as if a Hassett Fed is more likely than not—and will soon start pricing what that regime would mean for inflation, rates and the dollar.

Who is Kevin Hassett?

Kevin Hassett is no stranger to Washington—or to Trump.

According to his official biography, Hassett is a long‑time Republican economist who built his career at Columbia University and the conservative American Enterprise Institute, becoming known for research on corporate taxation, fiscal policy and supply‑side economics. ^[10]

Key elements of Hassett’s profile:

Trump insider: He chaired the Council of Economic Advisers in Trump’s first term and now runs the National Economic Council, giving him daily contact with the president and a central role in shaping tariffs, tax policy and growth strategy. ^[11]
Policy focus on tax and growth: Much of his academic work centres on capital taxation and pro‑growth reforms rather than the technical minutiae of monetary policy—one reason some economists question whether he is the best fit to run the Fed. ^[12]
Media‑savvy loyalist: Hassett is a fixture on cable news and business TV, defending Trump’s tariffs and arguing for faster interest‑rate cuts. Trump, an avid TV viewer, sees him often and values his public advocacy. ^[13]
Crypto‑friendly: Recent reporting notes that Hassett holds roughly $1 million in Coinbase stock and has overseen a White House digital‑asset working group—facts that have thrilled some crypto investors and raised questions about potential conflicts if he were to run the institution that regulates dollar liquidity. ^[14]

Reuters’ analysis of his recent public comments paints Hassett as a conservative economist with some unconventional ideas: he has downplayed tariff‑related inflation, argued that there is “no real argument” to halt rate cuts, and floated extremely long‑term mortgages, such as 50‑year loans, as tools to boost credit and housing. ^[15]

If he becomes chair, his consistent push for lower rates, combined with Trump’s political pressure, could tilt the Fed toward a more aggressively dovish path than current forecasts assume.

Who is Christopher Waller?

Christopher J. Waller is in many ways Hassett’s opposite: less political, more technocratic, and steeped in central banking.

Waller has served on the Federal Reserve Board of Governors since December 2020, after a long academic career and more than a decade as research director and executive vice president at the St. Louis Fed. His research focuses on monetary theory, political economy and macroeconomics. ^[16]

Highlights of Waller’s profile:

Career central banker: Waller’s entire recent career has unfolded inside the Fed system. He helped build the St. Louis Fed’s research reputation and is widely considered an expert in how monetary policy transmits through the economy. ^[17]
Flexible policy record: Before inflation took off, Waller was seen as dovish, arguing against premature tightening when price pressures were subdued. As inflation surged in 2021–22, he became a forceful advocate for sharp rate hikes. With inflation now closer to target and the labour market softening, he has backed a series of gradual cuts. ^[18]
Data‑driven dove (for now): In a November speech, Waller said underlying inflation is near the Fed’s 2% goal and the labour market shows clear signs of weakness, so he supports another 25‑basis‑point cut at the December meeting and is not especially worried about inflation expectations unmooring. ^[19]

Crucially, Waller’s career has been spent inside the institution he would lead. That makes him, in the eyes of many economists, more likely to defend the Fed’s independence if political pressure intensifies.

The Economist: “Choose the technocrat, not the partisan”

Against this backdrop, The Economist weighed in on December 2 with a leader bluntly titled “Chris Waller, not Kevin Hassett, should lead the Federal Reserve.” ^[20]

While the full article sits behind a paywall, public excerpts and social posts summarise its core argument:

Expertise gap: The editorial notes that Hassett’s scholarly work largely concerns tax and fiscal policy, whereas Waller is a dedicated monetary‑policy expert with a strong track record of anticipating economic trends. ^[21]
Independence risk: It warns that filling the Fed with loyalists—especially after Trump’s attempts to remove Democratic‑appointed governor Lisa Cook and his nomination of close ally Stephen Miran—could convince investors that the central bank is losing its independence. That, the article suggests, would eventually provoke a market backlash. ^[22]
Political vs technocratic choice: Framed simply, the piece urges Trump to pick the “technocrat over the partisan,” arguing that robust, credible monetary policy is ultimately in a president’s own interest. ^[23]

Coming from a globally read, market‑focused publication, the editorial has added intellectual firepower to the “Waller camp,” even as traders continue to price Hassett as the likely outcome.

Economists vs markets: Waller preferred, Hassett expected

The Economist’s view is not an outlier. Surveys suggest most academic economists would prefer Waller—but few think he will actually get the job.

A recent poll from the University of Chicago Booth School of Business found that around 82% of economists surveyed picked Waller as their preferred next Fed chair. Yet only a small minority thought he was likely to be chosen, while roughly two in five respondents predicted Trump would instead nominate Hassett. ^[24]

High‑profile market voices echo that tension:

Wharton economist Jeremy Siegel called Hassett a “very good” economist but said his strengths lie outside the technical world of central banking. Siegel’s own top picks would be Waller or former Fed official Kevin Warsh. ^[25]
Siegel also expects the Fed to cut rates by 25 basis points at its December 9–10 meeting and then signal a pause—underscoring how delicately the next chair will have to balance rate‑cut hopes against persistent inflation. ^[26]

In short, economists are saying: Waller would be better; Hassett will probably win.

A “shadow Fed chair” and a politicised central bank?

One reason the race is drawing so much attention is timing. Powell’s term ends in May 2026, but the identity of his successor could shape policy long before the gavel passes.

A Reuters “Breakingviews” column argues that if Hassett is nominated this month, he will effectively become a “shadow Fed chair” for about five months: every interview, speech and op‑ed will be seen as a preview of the next regime, even while Powell still formally runs meetings. ^[27]

The same analysis, and subsequent commentary, highlight several concerns:

Board composition: With Trump ally Stephen Miran already on the Fed Board and Trump‑era appointees Waller and Bowman in place, a Hassett chairmanship plus a successful legal effort to remove Lisa Cook could produce a 5–2 majority of Trump‑aligned governors. ^[28]
Aggressive rate‑cut pressure: Miran and some advisers have publicly backed rate cuts of two to three percentage points—far more than baseline forecasts—and Trump has demanded “ultra‑low” rates despite inflation still above target. ^[29]
Market discipline: Analysts quoted by Reuters stress that the Fed’s legal mandate and the need to maintain credibility would limit how far any chair—even a politically connected one—could stray from data‑driven decisions. But they also warn that perceived political capture could push up inflation expectations, steepen the yield curve and weaken the dollar. ^[30]

This is where Waller’s candidacy looks different. As a sitting governor with a long Fed résumé, he is seen as more likely to push back—politely but firmly—if the White House leans on the central bank for deeper or faster cuts than the data justify.

What a Hassett Fed vs a Waller Fed could mean for markets

No one knows exactly how either candidate would govern, but their records point to distinct reaction functions.

Under Kevin Hassett

Based on his public remarks and analyses referencing his views, a Hassett‑led Fed might:

Cut faster and further: Hassett has repeatedly argued there is no strong reason to stop rate cuts, and has framed the Fed as overly cautious. That’s consistent with investor expectations for a more dovish path if he takes over. ^[31]
Tolerate higher inflation: A chair who emphasises growth, jobs and political goals might be more willing to accept inflation modestly above 2% for longer, so long as nominal growth remains strong. Market strategists already warn this could push up long‑term inflation risk premia. ^[32]
Experiment with tools: Ideas like 50‑year mortgages and explicit coordination with the White House on fiscal and credit policies suggest a greater appetite for unconventional measures that blur lines between monetary and fiscal policy. ^[33]
Weaken the dollar, boost risk assets?
- Short‑term: faster cuts would likely support equities, housing and credit, as borrowing costs fall.
- Medium‑term: a perception that the Fed is under political pressure could weaken the dollar and push up yields on longer‑term Treasuries as investors demand more compensation for inflation and political risk. ^[34]

Under Christopher Waller

A Waller Fed, by contrast, would likely look more familiar to markets:

Data‑driven, incremental cuts: Waller already supports a December cut, but explicitly because inflation is near target and labour is weakening—not because the White House is pushing. He has previously urged aggressive hikes when inflation was too high, then eased as data improved. ^[35]
Strong 2%‑target rhetoric: In prior speeches, Waller has emphasised the Fed’s inflation goal and argued that temporary price shocks, such as tariffs, should not derail the long‑run commitment. That could reassure markets worried about “higher for longer” inflation. ^[36]
Institutional continuity: As an internal candidate, Waller would likely rely heavily on the Fed’s staff forecasts and the consensus of the rate‑setting committee, rather than treating the institution as an extension of the White House. For investors, that continuity is often as important as any single policy move. ^[37]

In market terms, the choice looks something like: Hassett = more stimulus, more risk; Waller = more continuity, more predictability.

Fed independence, reform – and El‑Erian’s warning

The debate isn’t just about personalities; it’s about the structure and independence of the Fed itself.

Treasury Secretary Scott Bessent has suggested using the coming transition to rein in what he sees as an over‑extended central bank, hinting that the Fed’s remit should narrow and that regional bank presidents wield too much market‑moving influence through frequent speeches. ^[38]

Prominent economist Mohamed El‑Erian, speaking in a recent interview, agreed that the Fed needs serious reform but warned that political leaders also need to “cool it” and stop treating the central bank as a short‑term political tool. ^[39]

Meanwhile, Trump’s attempt to fire Governor Lisa Cook, now before the Supreme Court, and his recess appointment of Stephen Miran have already raised eyebrows among central‑bank watchers worried about creeping politicisation. ^[40]

Against that backdrop, the choice between Hassett and Waller is widely viewed as a litmus test of how far Trump intends to push his influence over the central bank in his second term.

Today’s key developments (December 3, 2025)

News flow on December 3 has intensified the spotlight on the Fed chair race:

Reuters published a detailed account of Trump’s timeline and the internal resistance any new chair will face from a committee wary of deeper cuts with inflation still around 3%. ^[41]
The Economist released its leader urging Trump to pick Waller over Hassett, sharpening an expert consensus already visible in academic surveys. ^[42]
Prediction markets pushed Hassett’s odds higher after Trump called him a “potential Fed chair” at a White House event, with some platforms putting his probability above 80%. ^[43]
Global context: fresh OECD projections and a warning from Boston Fed President Susan Collins highlighted that there is limited room for new easing cycles worldwide, reinforcing the idea that whoever leads the Fed will have to work within tight constraints. ^[44]

The immediate next milestone is the December 9–10 FOMC meeting, where Powell will likely deliver another rate cut and updated forecasts. Markets will listen closely—but many investors are already looking past the current chair to the person who may be sitting in his seat by next summer.

The bottom line

As of December 3, 2025, the Fed chair race is defined by a striking disconnect:

Markets and Trump’s inner circle appear to have settled on Kevin Hassett as the heavy favourite.
Most economists and central‑bank insiders quietly insist that Christopher Waller would be the safer, more credible choice.

Trump’s final decision, expected early next year, will answer more than just the question “Who runs the Fed?” It will signal how much independence the central bank will enjoy in an era of stubborn inflation, AI‑driven economic change and rising political pressure on monetary policy worldwide.