Hassett says Powell decides for himself whether he stays as Fed chair
Hassett adds that Kevin Warsh would have to work alongside Powell if Warsh takes on a role, calling that setup unusual
Published
National Economic Council director Kevin Hassett said the decision on whether Jerome Powell remains as Fed chair rests with Powell himself. Hassett said that if Kevin Warsh takes on a role at the Fed, Warsh would have to deal directly with Powell, a situation he described as unusual.
Hassett has separately said that current interest payments are too high. Warsh has already staked out a hawkish position on policy, backing the Fed's rate increase in September and repeating warnings about inflation in mid-September.
The succession talk lands after a session in which long-dated Treasurys pulled back from a selloff. On Thursday the 10-year Treasury yield fell to 5.24% and the two-year yield dropped to 4.79%, down from levels that had pushed the 10-year above 5.2%. Gold rose 0.55% to $382.94 the same day as yields eased, after Fed Vice Chair Philip Jefferson's comments reduced expectations of an October rate increase. Traders were pricing the odds of another hike that month at 50-50, down from 70% after remarks from New York Fed President John Williams. Fed Governor Lorie Logan said more hikes are still needed as inflation lingers, Jefferson and Williams signaled no urgency on further increases, and Minneapolis Fed President Neel Kashkari said the September hike showed the Fed's resolve on inflation.
Hassett's deflection on Powell's tenure, and his framing of a Warsh appointment as unusual, leaves the leadership question unresolved. The operative signal for long-dated Treasurys remains the hawkish stance Warsh has already staked out, not any personnel change. With Jefferson and Williams having already pulled yields off multi-decade highs by signaling patience on a further hike, a muddled succession story changes little for bond pricing unless it actually settles who sets policy. The data on inflation and payrolls still due remains the more practical driver than commentary on who holds the chair.