The competition for the Federal Reserve Chair has entered a fever pitch, with "undercurrents" swirling in Wall Street and Washington, and Trump is "undecided."
The competition for the Federal Reserve Chair candidate under the Trump administration has entered a heated stage, with the two frontrunners, Hassett and Walsh, facing questions about their independence and credibility, while Federal Reserve Governor Waller has emerged as a "dark horse" with a solid policy background. Wall Street giants are deeply involved in the game, with heavyweight figures like JPMorgan CEO Jamie Dimon frequently communicating and expressing their positions to the government, and the lobbying and competition among the candidate camps are intensifying
Trump has not yet made a final decision on the next Federal Reserve Chair, and the candidate list was once narrowed down to Hassett in early December, but Warsh has re-entered the competition with a strong interview last week. Wall Street giants and Trump allies are lobbying on the candidate issue, and this selection process has evolved into an intense competition spanning the financial and political realms.
According to The Wall Street Journal, Federal Reserve Governor Waller also interviewed with Trump this week and received support from corporate executives. BlackRock executive Rick Rieder plans to interview at Trump's private club in the last week of the year. This indicates that the candidate pool has expanded again, and the competition has become even more heated.
According to The Wall Street Journal citing informed sources, insiders on Wall Street have been lobbying for Warsh, calling government officials to garner support for him, with some aiming to exclude Hassett from consideration. Critics argue that Hassett's close relationship with Trump may undermine his credibility as an independent central bank chair in the bond market.
There are significant divisions in the market regarding the candidates. A quick poll conducted on Wednesday among executives attending the New York conference showed that 81% of respondents support Waller for the Federal Reserve Chair, while Hassett and Warsh split the remaining votes.
Two Leading Candidates Face Different Scrutiny
The two frontrunners, Hassett and Warsh, both face credibility questions. Critics on Wall Street argue that Hassett's current job responsibilities include defending presidential policies on television and criticizing the Federal Reserve, which makes him unsuitable to lead an independent central bank.
Warsh's disadvantage lies in his overt eagerness for the position. Some question whether his support for interest rate cuts and Trump's broader economic agenda is entirely genuine. He has been stating for months that he believes the Federal Reserve should cut interest rates and reduce its balance sheet.
Despite Warsh's business supporters believing that he is more capable of maintaining independence from the White House compared to Hassett, as he is less likely to easily push for interest rate cuts without supportive economic conditions, Trump has indicated to the media that Warsh has explicitly conveyed to him that the Federal Reserve should cut interest rates.
Former Dallas Fed President Richard Fisher stated, "I believe you cannot get this job unless you make some sort of commitment to President Trump."
Wall Street Giants Actively Involved in Candidate Game
JPMorgan CEO Jamie Dimon stated last week at a private meeting in New York that he believes Hassett is more likely to quickly push for interest rate cuts, while Warsh would also perform excellently if he were to become Federal Reserve Chair. According to informed sources, Dimon has recently communicated with government officials regarding the Federal Reserve Chair candidates, expressing similar views when evaluating the two main competitors while also highlighting the positive traits of other candidates.
Those close to Warsh and some Trump administration officials believe that Dimon's statements in front of relevant individuals inside and outside the government effectively convey support for Warsh.
Additionally, well-known investor Stanley Druckenmiller, a long-time partner of Warsh and a former mentor and boss of Treasury Secretary Mnuchin, stated that he has not actively lobbied Trump officials to appoint Warsh as Federal Reserve Chair, but according to informed sources, he has clearly expressed his willingness to support Warsh for the position among his Wall Street allies
Dark Horse Candidate Waller Gains Attention
Waller's inclusion on the candidate list is noteworthy because, although he lacks personal ties to Trump, he possesses unique advantages that other candidates do not: he has demonstrated rational and coherent policy discussions on the topic of interest rate cuts and has a practical track record of promoting internal reforms within the Federal Reserve.
His supporters point out that Waller has initiated several reforms that may align with Trump's policy inclinations, starting from a relatively low-profile position: including opposing race-based hiring programs, working to reduce the Federal Reserve's initiatives on climate issues, halting the central bank digital currency project and shifting to support the development of private sector stablecoins, as well as overseeing budget cuts for regional Federal Reserve banks
