In the coming days or weeks, President Donald Trump is expected to announce his nominee to lead the Federal Reserve—a decision that will shape U.S. monetary policy for years to come. Two names have emerged as the leading candidates, both named Kevin, both with deep ties to Republican economic policy, but with notably different approaches to central banking.

Kevin Hassett, currently serving as director of the National Economic Council, and Kevin Warsh, a former Federal Reserve governor, represent the final two contenders in what has been an extended selection process. Trump himself has referred to them as "the two Kevins," and prediction markets currently give Hassett a slight edge.

Kevin Hassett: The Administration Insider

Kevin Hassett brings a unique credential to the Fed chair race: he's already inside the Trump White House. As director of the National Economic Council, Hassett serves as the president's chief economic advisor, giving him daily access to Trump and deep familiarity with administration priorities.

Hassett's background spans academia, think tanks, and government:

  • American Enterprise Institute: Spent nearly two decades as a senior fellow at the conservative think tank, focusing on tax policy and economic growth
  • Council of Economic Advisers: Served as chair during Trump's first term, from 2017 to 2019
  • Campaign advisor: Worked on economic policy for multiple Republican presidential campaigns, including for John McCain and Mitt Romney
  • Academic credentials: Ph.D. in economics from the University of Pennsylvania

Hassett's economic philosophy centers on supply-side growth. He was a principal architect of the 2017 Tax Cuts and Jobs Act and has consistently advocated for policies that reduce regulatory burdens on businesses. On monetary policy, he has generally supported lower interest rates as conducive to investment and growth.

Polymarket, the prediction market platform, currently assigns a 43% probability to Hassett's nomination—making him the slight favorite in the race.

Kevin Warsh: The Fed Veteran

Kevin Warsh offers something Hassett cannot: direct experience governing the Federal Reserve. Warsh served on the Fed's Board of Governors from 2006 to 2011, a period that included the 2008 financial crisis and its aftermath.

His credentials include:

  • Fed experience: Five years as a governor, including serving as the Fed's liaison to Wall Street during the financial crisis
  • White House tenure: Worked on the National Economic Council under President George W. Bush before joining the Fed
  • Investment banking: Spent years at Morgan Stanley before entering government
  • Stanford affiliation: Currently a distinguished visiting fellow at the Hoover Institution

Warsh was a finalist for the Fed chair position in 2017, when Trump ultimately selected Jerome Powell. His return to contention suggests the administration values his market credibility and institutional knowledge.

Policy Differences

While both Kevins are conservatives with Republican credentials, their approaches to Fed policy differ in meaningful ways:

On inflation:

  • Warsh has been outspoken about the need for price stability and has criticized the Fed for being too slow to raise rates in 2021-2022 when inflation was accelerating
  • Hassett has emphasized that inflation expectations remain well-anchored and that the Fed should be careful not to over-tighten and damage growth

On Fed independence:

  • Warsh has defended the Fed's institutional independence while acknowledging room for improved communication with the executive branch
  • Hassett's current role as a presidential advisor raises questions about how he would navigate potential conflicts between White House preferences and Fed mandates

On interest rates:

  • Warsh is generally viewed as more hawkish, prioritizing inflation control even at the cost of slower growth
  • Hassett has expressed views more aligned with Trump's preference for lower rates to stimulate investment and economic activity

What Trump Wants

President Trump has made no secret of his preferences for Fed policy. He has repeatedly criticized Jerome Powell for not cutting rates aggressively enough and has indicated that his next Fed chair should be more responsive to administration priorities.

In comments last month, Trump suggested that immediate rate cuts are a "litmus test" for the next chair—a signal that has led some observers to favor Hassett's odds. An advisor already aligned with the president's economic team may be more willing to pursue accommodative policy.

However, Trump also values market credibility. A Fed chair who is perceived as politically compromised could face resistance from bond markets, potentially driving long-term interest rates higher even as the Fed tries to cut short-term rates. Warsh's market experience and reputation for independence could provide a counterweight.

The Confirmation Process

Whoever Trump nominates will face Senate confirmation—a process that could prove contentious given the narrow Republican majority. Key considerations include:

  • Democratic opposition: Either candidate can expect unified Democratic opposition, with critics likely to focus on independence concerns and past policy positions
  • Republican skeptics: Some Republican senators may prefer a more hawkish chair focused primarily on inflation
  • Market reaction: Significant negative market response to a nomination could complicate confirmation efforts

The current Fed chair, Jerome Powell, completes his term in May. The confirmation process typically takes 2-3 months, meaning a January nomination would allow time for the new chair to be in place before Powell's departure.

The Lisa Cook Question

Adding complexity to the Fed leadership situation is the pending Supreme Court case regarding Governor Lisa Cook. President Trump has sought to remove Cook, a Biden appointee, from the Fed Board—a move that would be unprecedented in the central bank's history.

Oral arguments in the case are scheduled for January 21. If the Supreme Court rules that Trump can dismiss Cook, it would establish a precedent that could make all Fed governors subject to presidential removal, fundamentally altering the Fed's independence.

The Fed chair nomination and the Cook case together could reshape the Federal Reserve more dramatically than any development since the Volcker era.

Market Implications

For investors, the choice between Hassett and Warsh carries meaningful implications:

Hassett scenario:

  • Likely more aggressive rate cuts in 2026 and beyond
  • Potential for closer coordination between fiscal and monetary policy
  • Risk of market skepticism about Fed independence, possibly pushing long-term yields higher

Warsh scenario:

  • More measured approach to rate cuts, with inflation remaining the primary focus
  • Greater continuity with current Fed policy framework
  • Stronger market confidence in Fed independence

Either choice represents a departure from the Powell era, but the magnitude of change differs substantially.

The Bottom Line

President Trump's choice between the two Kevins will set the direction of U.S. monetary policy for the remainder of the decade. Kevin Hassett offers close alignment with administration priorities and a supply-side growth orientation. Kevin Warsh brings Fed experience and market credibility with a more traditional focus on price stability. The announcement could come any day, and when it does, markets will react to what it signals about the Fed's future direction. This is one of the most consequential economic decisions Trump will make in his second term.