The competition for the successor to the Federal Reserve Chair has entered a critical stage. JPMorgan CEO Jamie Dimon publicly expressed support for former Federal Reserve Governor Kevin Warsh, while sternly warning against another popular candidate, Kevin Hassett, due to his political affiliations, which may threaten the independence of monetary policy. Dimon emphasized during a private asset management CEO meeting in New York that Warsh possesses solid professional qualifications and is expected to become an excellent Federal Reserve Chair. In contrast, Hassett's submissive stance towards the White House's calls for interest rate cuts could disrupt the balance of interest rate control. He analyzed that the Federal Reserve can only lead short-term interest rates, while long-term rates (such as the 10-year U.S. Treasury yield) are primarily determined by the market. If Hassett takes office and cooperates with the White House to implement aggressive rate cuts, the market may react with concerns over the loss of independence and excessive binding to executive power, further reinforcing expectations of inflation rebound. This could lead investors to sell bonds, pushing long-term rates higher, ultimately resulting in increased long-term borrowing costs, undermining the White House's intention to reduce financing costs through a change in leadership. This risk is already reflected in market pricing; after news broke in late November that Hassett was the frontrunner, the global asset pricing for the 10-year U.S. Treasury yield rose from 4.0% to 4.2%. The 5-year forward inflation swap rate, which measures long-term inflation expectations, increased by 0.06 percentage points to a new monthly high, and inflation anxiety in the bond market continues to escalate. Several seasoned investors holding $30 trillion in U.S. Treasuries have conveyed concerns to Treasury officials, questioning whether Hassett's close political ties to Trump might undermine the credibility of monetary policy. Currently, Warsh and Hassett are in the lead. Hassett, as a former White House aide, openly supports aggressive rate cut proposals, although he argues for maintaining central bank independence; Wall Street still views him as a 'policy executor.' Warsh, although controversial due to his past hawkish stance and criticisms of the Federal Reserve, has received endorsements from Wall Street moguls and has already undergone an interview with the White House. The selection process led by the current nominee for Treasury Secretary continues to advance, and Trump plans to expand the interview scope next week, with the final candidate expected to be revealed in a few weeks.
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