Bond investors warned of Hassett as potential Fed chair over rate-cut fears, FT reports

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Dec 3 (Reuters) – Bond investors have expressed concerns to the U.S. Treasury that Kevin Hassett could aggressively cut interest rates to align with President Donald Trump’s preferences, the Financial Times reported on Wednesday, citing several people familiar with the conversations.

The discussions with executives at major Wall Street banks, asset management giants and other big players in the U.S. debt market took place in November, before Treasury Secretary Scott Bessent held his second round of interviews with candidates to replace Jerome Powell, the report said.

Reuters could not immediately verify the report. 

The bankers and investors were worried that Hassett could agitate for indiscriminate rate cuts even if inflation continues to run above the Fed’s 2% target, the report added.

Members of the Treasury Borrowing Advisory Committee were among those consulted, FT said, adding that when Hassett met the group earlier this year, he focused on White House priorities, including Mexican drug cartels, rather than the market.

A Treasury spokesperson said it “regularly engages with a variety of market participants and investors on important developments and dynamics in the Treasury market and broader financial markets”.

“During discussions with key stakeholders, the expected distribution of market outcomes across several asset classes for the five potential Federal Reserve chairs was extremely narrow,” the spokesperson said.

Hassett, 63, chaired the White House Council of Economic Advisers during Trump’s first term and has been a vocal supporter of the president’s economic agenda, including sweeping import tariffs and calls for lower interest rates.

Hassett, whose office is in the West Wing of the White House, has direct access to the president and has helped shape his views on trade and economic issues, as well as monetary policy.

The Treasury added it was “confident that (Trump’s) selection will serve the American people well”.

“The president will continue to nominate the most qualified individuals to the federal government, and until an announcement is made by him, any discussion about potential nominations is pointless speculation,” said White House spokesman Kush Desai.

Trump on Tuesday said he will announce his pick to succeed Powell as Fed chair early next year, extending a months-long selection process despite previously claiming he had already decided on the candidate.

(Reporting by Bipasha Dey and Ananya Palyekar in Bengaluru; Editing by Daniel Wallis)