In an interview with The Wall Street Journal, US President Donald Trump revealed that he is counting on former Fed Governor Kevin Worsh and National Economic Council Director Kevin Hassett to lead the Federal Reserve through May 2026.
Asked if Kevin Wersh tops the list, Trump said, “Yes, I think he is. I think you have Kevin and Kevin. They’re both – I think both Kevins are great,” he said. “I think some of the other guys are great too.”
The article noted that Warsh was questioned during a 45-minute meeting at the White House on Wednesday, in which Trump pressed Warsh on whether he could trust him to support low interest rates.
Trump said, however, that the next Fed chairman should seek his advice on where to set interest rates.
Fed FAQ
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and to promote full employment. Its primary tool to achieve these goals is to adjust interest rates. When prices are rising too fast and inflation is above the Fed’s 2% target, it raises interest rates, which increases borrowing costs throughout the economy. This results in a strengthening of the US dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the unemployment rate is too high, the Fed may lower interest rates to encourage borrowing, which has an impact on the greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. Twelve Fed officials participate in the FOMC – the seven members of the Board of Governors, the President of the Federal Reserve Bank of New York, and four of the remaining eleven regional reserve bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy called quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit into a stuck financial system. It is a non-standard policy measure used during a crisis or when inflation is extremely low. It was the Fed’s weapon of choice during the great financial crisis in 2008. This involves the Fed printing more dollars and using them to buy higher grade bonds from financial institutions. QE generally weakens the US dollar.
Quantitative tightening (QT) is the opposite process of QE, whereby the Federal Reserve stops purchasing bonds from financial institutions and does not reinvest the principal from maturing bonds to purchase new bonds. This is generally positive for the value of the US dollar.
