Trump Has His Fed Chair Pick But Won't Tell Anyone-Here's What We Know

President Donald Trump has confirmed he has made a decision on the next Federal Reserve Chair, but has not yet announced the name. During an interview with The New York Times, Trump stated that he had finalized his pick but chose to keep the identity private for now. He did not confirm any specific names, though he praised Kevin Hassett as one of his favorites.

The Federal Reserve, led by current Chair Jerome Powell until his term ends in May, has been under pressure from both the Trump administration and private sector players to cut interest rates. Treasury Secretary Scott Bessent has been a vocal proponent of rate cuts, calling them the only missing ingredient for stronger economic growth. Bessent has also spoke about the need for the Fed to act decisively to support investment and growth.

The Congressional Budget Office (CBO) recently released a report projecting that the Fed will cut short-term rates in 2026. The key interest rate is expected to settle at 3.4% by the end of 2028. Despite these rate cuts, 10-year Treasury yields are expected to rise gradually, increasing from 4.1% in the fourth quarter of 2025 to 4.3% by 2028.

Why Did This Happen?

The CBO report factors in Trump's economic policies, including tariffs, immigration controls, and the tax and spending law passed in July 2025. These policies are expected to influence GDP growth, unemployment, and inflation over the next three years. The report notes that while these policies affected the near-term economic trajectory, they did not significantly alter the overall economic outlook through 2028.

Unemployment is expected to peak at 4.6% in 2026 before gradually declining to 4.4% by 2028. This is largely due to the impact of the tax and spending law and a reduction in migration rates. GDP growth is projected to rise to 2.2% in 2026, supported by fiscal policy and a rebound from the government shutdown in late 2025. However, growth is expected to slow to an average of 1.8% in 2027 and 2028 as fiscal support wanes.

What Are Analysts Watching Next?

Analysts and investors are closely monitoring the Fed's next moves in 2026. The bond futures market currently prices in two rate cuts for the year, while the Fed's most recent projections point to only one cut. Polymarket data suggests a 27% chance of two 25-basis-point rate cuts and a 22% chance of three cuts. The difference between market expectations and the administration's desires is creating tension.

The selection of the next Fed Chair will play a critical role in determining the pace and direction of monetary policy. Kevin Hassett and Kevin Warsh are the top candidates, with Hassett currently leading the National Economic Council. Both are expected to favor the rate reductions Trump has repeatedly called for.

How Did Markets Respond?

The market's confidence in the Fed's ability to manage inflation and employment is also under scrutiny. The UBS economic team recently adjusted its projections, moving the expected rate cuts to July and October 2026 from earlier forecasts. This shift was driven by stronger-than-expected jobs data and incoming inflation releases, which suggest a cautious approach to rate cuts.

Federal Reserve Governor Stephen Miran has also weighed in, predicting 150 basis points of rate cuts in 2026. Miran cited his assessment that underlying inflation is at 2.3%, close to the Fed's 2% target, as a justification for more aggressive rate reductions.

Philadelphia Fed President Anna Paulson has taken a more cautious stance, stating that the Fed may be able to cut rates further if inflation cools. However, she emphasized that any additional cuts are likely to occur later in the year rather than immediately.

The next Fed Chair will inherit a central bank at a critical juncture, with intense political pressure from the White House to cut rates. Despite this pressure, analysts believe the Fed is likely to maintain its independence through a committee-based decision-making process. However, the perception of political influence, particularly from Trump's public criticism of Powell and the potential removal of Fed Governor Lisa Cook, remains a concern.

The market will continue to watch for signals of Fed independence and the extent to which political pressure influences monetary policy decisions. Bond yields and market volatility could serve as indicators of confidence in the Fed's leadership and decision-making process.