Concerns Over Fed's Political Independence
Criticism of Potential Appointment of Trump Ally
Likelihood of Kevin Hassett's Appointment Declines
JPMorgan Chase CEO: "Kevin Warsh Is More Suitable"
Ken Griffin, CEO of the major US hedge fund Citadel, stated that President Donald Trump should "maintain distance" from the Federal Reserve (Fed).
According to the Financial Times (FT) on December 16 (local time), Ken Griffin made these remarks at an event in Paris, France, when asked whether Kevin Hassett, Chairman of the White House Council of Economic Advisers, should be appointed as the next Fed Chair. He said, "The most important thing the President and the next Chair can do is to maintain distance between the White House and the Fed."
This statement is interpreted as reflecting Wall Street's concerns that President Trump may appoint a close associate as the next Fed Chair. Chairman Hassett is a close associate of Trump and is considered the most likely candidate for the position. However, the likelihood of his appointment has recently declined noticeably.
Investors are concerned that because of his personal relationship, Chairman Hassett may find it difficult to resist President Trump's pressure to cut interest rates, and may have limitations in curbing inflation. In this scenario, long-term bond yields could rise, resulting in the opposite of President Trump's desired low interest rate environment. As anxiety among investors grows, President Trump has also adopted a more cautious stance.
Chairman Hassett has emphasized that the key interest rate should be determined independently of political pressure. However, in a recent interview with CNBC, he stated, "If President Trump has good ideas regarding economic policy, I will communicate them to the Fed's rate-setting committee," and added, "The President is a seasoned expert who has observed the economy for a long time." These comments have sparked controversy.
Reflecting this, Jamie Dimon, CEO of JPMorgan Chase, indicated last week that Kevin Warsh, former Fed Governor who served as a bridge between the Fed and Wall Street during the financial crisis, would be a more suitable candidate for the next Chair.
However, CEO Griffin clarified that he is not endorsing any particular candidate. He said, "Expressing my opinion would not help the decision on the next Chair," and added, "I hope the President chooses someone who can reassure global financial markets, American investors, and consumers that the United States can manage inflation."
Meanwhile, CEO Griffin is well-known for supporting Republican presidential candidates. However, he withheld official support for President Trump in last year's election and has also publicly criticized President Trump's reciprocal tariff policies.
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