It's a warning that did not go unnoticed, addressed by Donald Trump to his Treasury secretary at a US-Saudi investment forum on November 19: "The only thing Scott struggles with is the Fed... If you don't fix the problem quickly, I'll fire you on the spot."
A small statement that clearly sets the stakes. First, there is Donald Trump's frustration with the Fed - and particularly with Jerome Powell. Then the fact that Scott Bessent, who oversees the process of selecting the next Fed chair, will be accountable for the latter's results.
"Feeling the president's wrath"
For months, Donald Trump has accused Jerome Powell, nicknamed "Too Late" for not cutting interest rates enough. He has even threatened to fire him several times.
Yet, he appointed him to head the Fed in 2017. A choice he regrets and especially blames his former Treasury secretary, Steven Mnuchin, who pushed for Powell's nomination at the time.
"Steve 'Manouychin' really gave me a great gift by pushing this feeble one. The damage he has caused by always being Too Late is incalculable," he wrote in August in a post on Truth Social.
In a book published in 2021, Kevin Hassett recalls the reproaches from Donald Trump after Powell's nomination: "Because he had proposed Jerome Powell for the Fed post, Steven Mnuchin had to endure the president's wrath at the start of virtually every meeting for his recommendation from that moment," wrote the man who was chairman of the Council of Economic Advisers from 2017 to 2019.
Kevin Hassett, today director of the National Economic Council (NEC), who is also the leading candidate for the Fed chair. That is what Bloomberg reported last week, and that is also what Donald Trump hinted at Tuesday during a White House cabinet meeting: "We have probably considered 10 candidates, but we only have one left."
Bessent under pressure
Trump was here referring to the selection process, overseen by Scott Bessent. After an initial round of interviews in September, involving 11 people, Scott Bessent again spoke with 5 finalists, just before Thanksgiving.
And if further interviews were planned, notably with Vice President JD Vance, and Chief of Staff Susie Wiles, it would seem that Donald Trump had already paused his pick.
What the American president absolutely wants are lower interest rates, especially to bring down mortgage rates. That is therefore what he expects from the next Fed chair.
Is Kevin Hassett the best placed for that? Nothing is less certain. As Scott Bessent reminded: "The president of the Federal Reserve has the ability to start and initiate the debate, but ultimately, he only has one vote."
According to the Financial Times, bond investors also conveyed their concerns to the US Treasury about the possible nomination of Kevin Hassett to the Fed chair, fearing he would be too aligned with Donald Trump.
Nevertheless, it will be necessary to wait and see Kevin Hassett in office to truly measure his influence on the committee and his credibility with respect to the markets.
But whatever happens, it will be Scott Bessent who will in some sense be accountable for the next Fed chair's ability to deliver the rate cuts anticipated by the president. The pressure on him will therefore be strong.
And the workload too, since, according to Bloomberg, if Kevin Hassett is named head of the Fed, Scott Bessent could return to his NEC director post, in addition to his duties as Treasury secretary.
