One of the favorites to steal Powell's seat at the Fed, he is known for theories of increased productivity through tax cuts and a prediction that took 22 years to materialize.
Let's find out who Hassett is and what it means for him to assume the presidency of the Fed.
1/ THE FISCAL THESIS: CUTTING TAXES IS CUTTING INTEREST RATES
Hassett is a strong advocate for tax cuts for businesses (corporate taxes).
He believes that this reduction increases marginal productivity (how much each additional worker produces), which, in turn, increases wages.
2/ 📈 THE "Dow 36,000" CONTROVERSY
In 1999, Hassett co-authored a book with the famous and controversial prediction that the Dow Jones index would reach 36,000 points.
The prediction, made before the dot-com bubble, was widely criticized as "too optimistic" and became a joke.
In practice, the index took 22 years to reach that level.
3/ 📉 TRUMP'S HAND IN THE FED
The current Fed chairman, Jerome Powell, has a term until May 2026 – but they are trying to bring that date forward.
Hassett emerges as Donald Trump's main favorite for the succession.
Interesting fact👇
Trump appointed Powell in his first term, but regretted it when Powell did not accelerate interest rate cuts at the desired pace. The choices for the Fed are the most direct way for a president to influence the Central Bank.
4/ Structure of the Fed
First of all, to understand what changes with Hasset, we need to understand HOW the Fed actually works.
Composition:
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7 members of the Board of Governors (includes the Chair)
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5 presidents of regional Fed banks. New York always votes and the others rotate.
Total: 12 votes per meeting.
Decision: simple majority.
5 / DOES THE FED CHAIRMAN'S VOTE COUNT FOR MORE?
Formally:
❌ No.
The Chair has 1 vote equal to that of any other voting member.
In practice:
✅ Yes, he has more influence, but not more voting power.
6/ Criticism of the Fed
In recent months, Hassett has intensified his criticism of the Fed.
He said the institution was "late" in cutting interest rates and suggested that errors in the budget for the headquarters renovation could justify Jerome Powell's dismissal.
He also raised doubts about alleged "partisan patterns" in the release of employment data.
Although Hassett's vote did not completely change the direction of the Fed, overall, markets follow the Chair, not the dissenters.
7/ Summary of Hassett's risk at the Fed
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Structurally lower interest rates
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Persistent inflation above 2% DEFINITELY becoming the "new normal"
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Risk assets (stocks, crypto, RE) loving it in the short term
Critics warn of an "overly" aligned position with Trump, which could undermine the Fed's independence.
8/ WHAT TO EXPECT?
If Kevin Hassett is chosen, the US could enter an era of:
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Monetary policy more aligned with the White House.
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Faster and more aggressive interest rate cuts (BofA predicts "well below 3%").
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A broader review of the Fed's actions and management, something considered by the government.