Between the usual panels and the buzzier geopolitical debates grabbing headlines, the annual World Economic Forum in Davos, Switzerland, is playing host to a high-stakes drama: who will emerge as the next chair of the U.S. Federal Reserve, and on what terms.
For much of the past year, National Economic Council director Kevin Hassett appeared to be the natural heir apparent. A veteran of Republican economic policymaking and a key architect of the 2017 tax overhaul, Hassett enjoys credibility with GOP lawmakers and Fed officials alike.
“I’m saying, wait a minute, if I move him, these Fed guys, certainly the one we have now, they don’t talk much,” Trump said to reporters at a White House event, then addressed Hassett, who was listening in the audience. “I would lose you. It’s a serious concern to me.”
That’s likely because Waller has consistently argued for more rate cuts, while also having a dearth of academic research behind him on the importance for Fed independence to safeguard him against claims that he is politically captured. That ability to thread the needle is more important now than ever.
As the Davos summit begins, the focus remains on the “Two Kevins” and the looming decision that will define the American economy for the latter end of the Trump era.
If Trump does use his Davos address to name Jerome Powell’s successor, the pick would still need to get past the Senate Banking Committee to make it to the floor for a vote. If the DOJ investigation doesn’t get resolved, Trump might not be able to get anyone through the GOP coalition on the Banking committee that is standing by Powell.
