WSJ: Trump leaning toward Kevin Warsh or Kevin Hassett to lead the Fed

Changes in Trump's Policy Intent

President Trump has suggested he may nominate either former Fed governor Kevin Warsh or National Economic Council Director Kevin Hassett for the next Federal Reserve Chair, emphasizing that the chosen candidate should be willing to lower interest rates and consult him on monetary policy.

Key Contenders

Trump referred to Warsh and Hassett as "the two Kevins," highlighting that while Hassett was previously seen as the frontrunner, Warsh remains a strong candidate as well. He has insisted that the next Fed Chair needs to seriously consider his input on economic policies.

Expectations for Rate Cuts

Trump expressed a desire for significantly lower interest rates, aimed at reducing the national debt financing costs. He wants rates at or below 1%, indicating an aggressive monetary policy shift that could reshape economic strategies.

Investor Perspective

Hassett was favored at over 80% support last week on Polymarket, but this number dropped to 66% recently, while Warsh's support increased to 31%. These shifts are significant and show potential market impact, warranting investor attention.

Outlook

Data about future Fed interest rate policies is eagerly awaited. SF Fed President Mary Daly has indicated her support for a rate cut at this week's meeting, implying that market responses may be sensitive to upcoming developments.