CaliToday (13/12/2025): President Donald Trump has officially signaled the beginning of a major pivot in U.S. monetary policy, revealing that he has narrowed his search for the next Federal Reserve Chairman to two top contenders. In a wide-ranging interview with The Wall Street Journal, the President outlined a vision for aggressive economic stimulus, explicitly targeting a benchmark interest rate of 1% or lower within the next year.
As current Chairman Jerome Powell’s term approaches its expiration next May, the race to lead the world’s most powerful central bank has heated up, with the President confirming that Kevin Warsh and Kevin Hassett are leading the pack.
The Frontrunners: Warsh Takes the Lead
President Trump confirmed that while several qualified candidates remain in the mix, the selection process is currently focused on "The Two Kevins."
Kevin Warsh: The former Federal Reserve Governor is currently described by Trump as being at the "top of the list." The President revealed he held a direct meeting with Warsh at the White House earlier this week. The primary topic of discussion was Warsh's stance on rate cuts. According to Trump, Warsh is in favor of lowering rates, a position that aligns with the consensus of economic experts the President has consulted.
Kevin Hassett: The former Chairman of the Council of Economic Advisers remains a strong contender, with Trump praising both men as "excellent choices."
The 1% Vision: A Radical Shift
Perhaps more significant than the personnel choice is the policy mandate Trump is articulating. When asked about his ideal interest rate target for the coming year, the President did not mince words: "About 1 percent or even lower."
This target represents a drastic reduction from the current policy stance. Trump argues that returning to an ultra-low rate environment is essential for two key reasons:
Debt Management: Drastically reducing the cost of servicing the national debt.
Global Competitiveness: Boosting the U.S. economy's standing on the global stage.
Challenging Fed Independence
President Trump also revisited a long-standing point of contention regarding the relationship between the White House and the Central Bank. He emphasized that whoever succeeds Jerome Powell must be willing to consult with the President when setting interest rate policies.
Trump clarified that he does not seek to dictate policy unilaterally but believes the "consultation" model which he claims was standard practice in the past must be restored. He argued this is necessary to ensure the voice of the elected administration is heard within the Fed's chambers.
The Economic Context
The President’s comments come on the heels of the Federal Reserve’s recent decision to cut rates by 0.25 percentage points the third consecutive cut bringing the benchmark to a range of 3.5% to 3.75%.
However, the Trump administration, along with Vice President JD Vance, views the Fed's current trajectory as too conservative. Internal Fed projections currently suggest only one minor cut in 2026. The White House argues this pace is insufficient to support their strategy of robust job creation and economic recovery, pushing instead for a monetary policy that actively relieves the financial burden on American households rather than maintaining prolonged high rates.
Source: The Wall Street Journal
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