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Power Shift at the Fed? Kevin Hassett Poised to Replace Powell Amid Trump Tensions
Rumors are swirling in Washington that Federal Reserve Chair Jerome Powell may soon step down, following growing tensions with former President Donald Trump. At the center of these discussions stands Kevin Hassett, a seasoned economist and former Trump advisor, who is reportedly the frontrunner to take Powell’s place. If this transition occurs, it could mark a major turning point for U.S. monetary policy — and the global economy.
The Powell–Trump Divide: A Battle Over Interest Rates
The relationship between Trump and Powell has long been contentious. During Trump’s presidency, he repeatedly criticized Powell for not cutting interest rates aggressively enough, often taking to Twitter to express his frustration. Trump believed that lower rates were essential to fuel economic growth and maintain U.S. competitiveness on the global stage.
Fast forward to 2025: Powell continues to advocate for a measured approach to monetary policy, keeping interest rates at around 4.5% to fight inflation and maintain financial stability. However, Trump, now a dominant figure in U.S. politics again, is pressing for massive rate cuts — from 4.5% down to 1.5%. His argument? Lower borrowing costs would stimulate business activity, boost the stock market, and support job creation.
This clash highlights a fundamental debate in economic policy:
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Should the Fed prioritize price stability and inflation control?
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Or should it aggressively pursue economic growth and employment, even at the risk of inflation and currency devaluation?
Who is Kevin Hassett?
Kevin Hassett is no stranger to economic policymaking. Known for his strong academic background and practical experience, Hassett has worn multiple hats throughout his career:
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Former Chairman of the Council of Economic Advisers (CEA) under Trump’s administration.
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Key architect of the 2017 Tax Cuts and Jobs Act, a hallmark of Trump’s economic policy.
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Senior roles at think tanks and research institutions such as the American Enterprise Institute, where he specialized in fiscal and monetary policy.
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Earlier in his career, Hassett worked as an economist at the Federal Reserve Board of Governors, giving him firsthand knowledge of the central bank’s inner workings.
His credentials make him an attractive candidate for Trump, who values loyalty and alignment with his economic vision.
Hassett’s Economic Philosophy: Trump’s Playbook Reimagined?
Hassett’s track record suggests that, if appointed, he would closely align with Trump’s economic agenda. This includes:
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Aggressive interest rate cuts to stimulate borrowing and investment.
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Policies aimed at strengthening the stock market as a driver of economic confidence.
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Favoring pro-business tax reforms and deregulation to promote growth.
Unlike Powell, who emphasizes inflation control and global financial stability, Hassett’s philosophy leans toward rapid economic expansion — even if it means taking bold, unconventional steps.
What Could This Mean for the U.S. Dollar?
If Kevin Hassett assumes leadership of the Federal Reserve and implements Trump’s preferred rate cuts, the implications for the U.S. dollar could be significant:
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Short-Term Impact: Lower interest rates typically weaken the dollar, as investors seek higher yields elsewhere. This could make U.S. exports more competitive but also increase import costs.
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Long-Term Concerns: A sharp policy shift might erode confidence in the Federal Reserve’s independence, potentially spooking global markets and pushing investors toward safe-haven assets like gold or even Bitcoin.
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Inflation Risks: Cutting rates too aggressively could reignite inflationary pressures, undoing the progress made in recent years to stabilize prices.
Market Reactions: Gold and Bitcoin in the Spotlight
Financial markets have already begun speculating on the potential shake-up at the Fed. In Q2 of 2025, Bitcoin outperformed gold by 21.27%, signaling growing investor appetite for alternative assets during times of policy uncertainty. If Hassett takes over and follows Trump’s playbook, both gold and Bitcoin could see renewed interest as hedges against a weakening dollar.
Could a Leadership Change Erode the Fed’s Credibility?
One of the Fed’s most valuable assets is its reputation for independence. For decades, markets have trusted that the central bank would act based on economic data rather than political pressure. If Powell resigns and Trump installs a loyalist like Hassett, critics argue this could undermine that trust, leading to greater market volatility and long-term uncertainty.
Supporters, however, see this as an opportunity to reinvigorate the economy through bold measures. They argue that the Fed has been too cautious, and a shift toward pro-growth policies could prevent a slowdown or recession.
The Bottom Line
The prospect of Kevin Hassett replacing Jerome Powell represents more than just a change in leadership; it could signal a dramatic pivot in U.S. monetary policy. For businesses, investors, and ordinary Americans, the stakes are high. Will this move unleash a new era of economic growth, or will it weaken the dollar and erode the Fed’s credibility?
As rumors swirl and political pressures mount, one thing is clear: the Federal Reserve remains at the center of America’s economic future — and the world is watching closely.
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