As regime change looms at the Fed, one candidate is emerging as a candidate for chairman

President Donald Trump knows who he’ll pick as the next chairman of the Federal Reserve, but he’s not saying just yet. Prediction markets have their minds made up, but the frontrunner is also playing coy.

While that part of the mystery appears poised to become clear in the coming weeks, what is far less certain is the type of environment the new central bank leader will face at a potential crossroads for the US economy.

National Economic Council Director Kevin Hassett has been named the clear front-runner, bolstered by a Bloomberg News report last week that put a five-person race to succeed current chairman Jerome Powell, whose term expires in May, at a disadvantage.

When asked about the situation on Sunday, Trump told reporters aboard Air Force One: “I know who I’m going to pick, yes. We’ll announce it.” In addition, he smirked when asked about Hassett, adding, “I’m not going to tell you, we’re going to announce it.”

The candidate made the rounds of the weekend debate circuit himself and also dodged questions about his prospects. Hassett is part of a field that also includes current governors Christopher Waller and Michelle Bowman, former governor Kevin Warsh and BlackRock fixed income chief Rick Rieder.

“I’m really honored to be among a group of really great candidates,” Hassett said Sunday on CBS’ “Face the Nation.” He noted that markets reacted positively to the news that he was the front-runner, saying Americans “can expect President Trump to pick someone who will help them, you know, have cheaper car loans and easier access to mortgages at lower rates.”

Shortly before, on Fox News, Hassett merely stated, “If he chooses me, I’ll be happy to serve.”

The prediction markets have been off the rails in recent days betting on Hassett getting the job. As of Monday afternoon, traders had assigned Kalshi a 79% probability, while PredictIt gave it a 75% chance and Polymarket had it at just 63%, with “no announcement before Christmas” having the second highest probability of 22%, easily beating any of the other four finalists.

Whoever he actually is will take over at a Fed that is currently torn between officials who think further interest rate cuts are warranted to head off potential problems in the labor market versus those who worry that inflation remains a threat that would be exacerbated by further monetary easing.

For the next rate decision on December 10, traders in the futures market are assigning an 87.6% chance of a cut in trading that has been highly volatile in recent weeks.

Trump and other administration officials have been vocal about their preference for much lower rates, and the president has said it’s a litmus test for the next seat. In 2026, members of the rotating cast of regional presidents who get a vote on the Federal Open Market Committee will be hawkish, meaning they will favor fighting inflation and keeping rates steady.

But the Fed’s upcoming regime will be about more than just rates.

In an interview with CNBC last week, Treasury Secretary Scott Bessent, who is leading the search for the Fed chairman, said he is in favor of rethinking the Fed’s mission.

“We’ve gotten to a point where monetary policy has become very complicated and it’s more than just cutting rates,” he said. “I think we need to simplify things somehow.

Bessent highlighted the role of regional chairmen in particular.

While they play a relatively limited role—at least compared to the chairman and the Board of Governors—in setting rates and other monetary policy issues, public comments from local leaders can occasionally move markets.

Bessent said this is part of broader problems related to the outsized role the Fed has come to play in the economy and financial markets, largely since the financial crisis, when the central bank played a key role in implementing programs to lift the economy out of its worst slump since the Great Depression.

“I think it’s time for the Fed to step back into the background as it has done in the past, calm things down and work for the American people, set monetary policy on a good course,” he said. “All these speeches from these bank presidents … are just redundant. Why don’t they actually just come out and talk about the issues that are meaningful to the American people rather than the short-term view of the next meeting?”

The view of regional presidents is important in that they come up for re-appointment in 2026. While local councils hire presidents, they are subject to approval by the board of governors. One of the issues Bessent also addressed was that several presidents are not from the districts they represent.

Mohamed El-Erian, Allianz’s chief economic adviser, applauded Bessent’s view.

“We don’t need a play-by-play Fed,” El-Erian said Monday morning on CNBC. “We need the Fed to cool it down. We need the Fed to step back and take a bigger, somewhat visionary view. And we need reforms. We desperately need reforms. And I think all five on the short list are committed to reforming this institution that’s critical not only to the U.S. but to the global economy.”

Correction: The Federal Reserve’s next meeting is Dec. 9-10, with a rate decision to be released the next day. An earlier version of this story misstated the date.