Trump said, "I have decided on the new Federal Reserve Chairman candidate," and Hassett stated, "The market's reaction to the news of the new chairman is very, very positive."

On Sunday, U.S. President Trump announced that he has decided on the next Federal Reserve Chair, having previously expressed his expectation for the new chair to promote interest rate cuts. This statement triggered a positive market reaction, with the 10-year U.S. Treasury yield briefly falling below 4%.

Kevin Hassett, Director of the White House National Economic Council, emphasized in a media interview on Sunday that the market's reaction to Trump's upcoming announcement of the new chair was "very, very positive." As Trump's chief economic advisor, Hassett is seen as a leading candidate to succeed Jerome Powell, currently leading with a 66% probability in polymarket predictions.

Hassett stated:

Following the news, U.S. Treasury auctions performed strongly, and interest rates fell, indicating that "the American public can expect Trump to select someone who can help them secure cheaper auto loans and lower mortgage rates."

U.S. Treasury Secretary Mnuchin indicated last week that Trump might announce his nominee before the Christmas holiday on December 25, with Powell's current term set to end in May next year.

Trump Confirms Decision Made

On Sunday, Trump told reporters aboard Air Force One on his way back to Washington: "I know who I'm going to pick, yes. We will announce this decision." However, he did not disclose the specific name of the candidate.

Trump has frequently criticized current Federal Reserve Chair Powell for not cutting rates quickly enough and has repeatedly signaled his hope that the new chair will be more aggressive in promoting rate cuts. According to insiders, Hassett is viewed as a potential successor.

Although Trump is known for changing his mind at the last minute, the news of Hassett's possible nomination has briefly pushed the 10-year U.S. Treasury yield below 4%.

Hassett Emphasizes Positive Market Reaction

Hassett declined to directly respond to whether he is the frontrunner to succeed Powell during a CBS program, calling the related reports "rumors." However, he particularly emphasized the market's positive reaction to the news of Trump's upcoming announcement, which is, in fact, a response to investor concerns about his close relationship with the president.

Hassett said:

This week, when that news leaked, what impressed me most was—I think the message the market received is that President Trump is about to announce a new candidate to succeed Powell. If you look at the market reaction, it is very, very positive.

He added, "That is what we see in the market's reaction to the rumors about me." Analysts warn that Hassett may find it difficult to unite the Federal Reserve's rate-setting committee and may be more susceptible to pressure from Trump. However, his emphasis on the market reaction effectively counters these concerns.

Nomination Process and Other Candidates

Insiders indicate that Trump trusts Hassett and believes he aligns with him on the willingness to push the central bank for more aggressive rate cuts. Hassett has stated that he would accept the position if invited.

Treasury Secretary Mnuchin, who oversees the selection process, indicated last week that Trump might announce his nominee before the Christmas holiday. Other contenders besides Hassett include Federal Reserve Governor Christopher Waller and Michelle Bowman, former Federal Reserve Governor Kevin Warsh, and BlackRock's Rick Rieder Trump has often expressed a desire for Bostick to serve as chairman, but Bostick has repeatedly declined.

Regardless of whom Trump chooses, Senate confirmation will be required for the chairman position. If the candidate comes from outside the Federal Reserve, confirmation may also be needed for a 14-year term as a Federal Reserve governor starting in February next year. Powell's term as chairman will end in May