Market wagers of Hassett as next Fed Chair "gaining traction," Wolfe analysts say

Investing.com - Wagers that White House economic advisor Kevin Hassett will replace Jerome Powell as Chair of the Federal Reserve next year have been "gradually gaining traction," according to analysts at Wolfe Research.

In a note, the strategists including Tobin Marcus and Chutong Zhu said they continue to view Hassett, the current Director of the National Economic Council, as President Donald Trump’s "likeliest choice" to succeed Powell in 2026.

Powell’s term at the helm of the U.S. central bank is due to end in May. Trump has largely made clear his displeasure with Powell’s leadership at the Fed, repeatedly badgering the Fed to quickly and aggressively slash interest rates to help boost the economy. Powell has received his ire over being "too late" to act on borrowing costs and hurting homebuyers by keeping mortgage rates elevated.

The Fed reduced interest rates by 25 basis points last month, as officials highlighted a need to prioritize a cooling labor market over signs of sticky price gains. It marked the restart of a cycle of policy easing that had been on hold since December due partially to concerns over the potential impact of Trump’s sweeping import tariffs on inflation.

Trump has said he has prepared a short list of candidates to take Powell’s place, including Hassett, former Fed Governor Kevin Warsh and current Fed governor Christopher Waller.

The Wolfe analysts noted that betting websites, such as Kalshi and Polymarket, are increasingly showing Hassett as the favorite out of the three, while a recent survey from the Financial Times found that economists expect Hassett to be appointed "despite preferring Waller" for the position.

Trump’s choice will likely carry high stakes for financial markets, as it could prove to be an indication of where U.S. interest rates, inflation policy, and the Fed’s longstanding independence are heading.