What Do Advisors Think of a White House-Aligned Fed Chair?

All right, who’s next?

The Federal Reserve cut rates by another 25 basis points yesterday, as expected, and the benchmark rate is now between 3.5% to 3.75%. With only a single cut projected for 2026, this might be one of the last moves under Chair Jerome Powell, whose term ends in May. Powell was first appointed by President Donald Trump in 2018, but the two have rarely agreed on policy recently. Trump has repeatedly said Powell was too slow to cut rates and has floated the idea of firing him. Whoever comes next is expected to be far more aligned with Trump, and advisors have some reservations.

“My biggest concern is the perception, or reality, that the Fed is less independent,” said George Chang, founder of Pillar Point Wealth Management. “If investors think policy is being led from the White House rather than data, regardless of what rate the Fed sets, you’ll see a ‘credibility discount’ in bond yields, the dollar and overall markets.”

Who’s It Gonna Be?

The White House hasn’t announced a nominee, but Trump told reporters Tuesday he has “a pretty good idea” of who he wants. The frontrunner is Kevin Hassett, director of the White House National Economic Council. Hassett has cast himself as a dove compared with what he considers Powell’s overly hawkish stance and said there was “plenty of room” for more cuts at a Wall Street Journal event this week.

However, the fact that Hassett is a likely candidate doesn’t make him Wall Street’s preferred choice, according to a CNBC survey:

• Some 84% of respondents said they think Hassett will be the next chair, but only 11% said he should be.
• Nearly half prefer Fed Governor Christopher Waller, though few expect him to be picked.
• Roughly a quarter favor former Fed Governor Kevin Warsh, but only 5% believe Trump will nominate him.

History Lesson. White House pressure on the Fed isn’t often successful, but it has happened. President Nixon pushed Fed Chair Arthur Burns to keep rates low heading into his 1972 re-election, which led to even worse inflation — not to mention soaring interest rates later. So, the worry is real. “If inflation becomes uncontrollable, and we don’t have a Fed separate from the government to step in to adjust rates appropriately, to put the brakes on, then who will address it?” said Omen Quelvog, founder of Formynder Wealth Management.

Still, it would be hard for the chair to steer the entire Fed. Even a Trump-aligned leader would face structural limits. “The [Federal Open Market Committee] is still a voting group, so [Trump] would really need to stack the deck to start dictating policy itself,” said Chris Diodato, founder of WELLth Financial Planning. “That would be a multi-year game regardless of who the head is.”