Trump Signals Preference for Hassett to Stay at White House, Shifting Fed Chair Odds and Markets

President Donald Trump indicated on Friday that he would prefer National Economic Council Director Kevin Hassett to remain in his current White House role rather than move to the Federal Reserve, a statement that quickly reshaped expectations around the next Fed Chair appointment and stirred financial markets.

Speaking directly to Hassett during a White House event, Trump openly praised his media performance earlier in the day and suggested that his communication skills are too valuable to lose. Trump remarked that Federal Reserve officials tend to avoid public commentary, implying that a move to the Fed would limit Hassett’s visibility and influence. “I actually want to keep you where you are, if you want to know the truth,” Trump said, before adding that losing Hassett would be “a serious concern.” He ended his remarks by leaving the door open, saying, “We’ll see how it all works out.”

The comments marked a noticeable shift in tone, as Hassett had previously been viewed as a leading contender for the Fed Chair position. Following Trump’s remarks, prediction markets reacted swiftly. On Polymarket, the odds of Kevin Warsh emerging as Trump’s preferred nominee surged to 54%, while Hassett’s chances dropped sharply to 16%. Federal Reserve Governor Christopher Waller also stood at 16%, signaling a more competitive and uncertain race than before.

The sudden change in expectations sent ripples across global markets. Currencies, gold prices, and equities all reacted as traders reassessed the likelihood of White House influence over future Federal Reserve policy. Investors are particularly sensitive to signals about the Fed’s independence, given its central role in managing inflation, interest rates, and economic stability.

Thierry Wizman, Global FX and Rates Strategist at Macquarie Group, had previously warned that successful White House pressure on the Fed could result in a weaker U.S. dollar, a steeper yield curve, higher long-term yields, and rising inflation breakevens. He had also suggested that the evolving political environment initially favored Hassett as the nominee, a view now cast into doubt by Trump’s latest statements.

According to Wizman, increased political influence over the Fed could ultimately lead to lower interest rates than would otherwise prevail, potentially fueling higher long-term inflation expectations. As markets continue to digest Trump’s remarks, attention remains firmly focused on who will lead the Federal Reserve next and what that choice could mean for U.S. monetary policy and global financial markets.