Executive Summary
– President Trump (特朗普) has identified former Fed Governor Kevin Warsh (凯文·沃什) and National Economic Council Director Kevin Hassett (凯文·哈塞特) as frontrunners for the next Federal Reserve Chair. – Trump emphasizes his desire for a Fed Chair who will communicate with him on interest rates and support aggressive easing, targeting rates as low as 1%. – The selection process involves final interviews, with Trump expressing regret over his previous choice of Jerome Powell (杰罗姆·鲍威尔) and highlighting internal Fed dissent on recent rate cuts. – The outcome will significantly influence global monetary policy, trade dynamics, and risk appetite in Chinese equities, making it a critical watchpoint for investors.
Navigating the Crossroads of U.S. Monetary Leadership
In a move that sent immediate ripples through global financial markets, President Donald Trump (特朗普) has publicly delineated his preference for the next helm of the world’s most influential central bank. The quest for the next Federal Reserve Chair has narrowed, with two key figures emerging from a field of candidates. This announcement is not merely a personnel decision; it is a pivotal signal regarding the future trajectory of U.S. interest rates, dollar liquidity, and by extension, the capital flows and valuation models underpinning Chinese equity markets. For institutional investors and corporate executives with exposure to Asian assets, understanding the profiles and policy leanings of Kevin Warsh (凯文·沃什) and Kevin Hassett (凯文·哈塞特) is now an urgent imperative. The focus on the next Federal Reserve Chair comes at a juncture where divergent monetary paths between the U.S. and China could redefine cross-border investment strategies for years to come.
Trump’s Revealing Oval Office Interview
The President’s comments, made during an interview in the Oval Office, provide unprecedented insight into his criteria for selecting the next Federal Reserve Chair.
The “Two Kevins” Take Center Stage
Trump explicitly named former Federal Reserve Governor Kevin Warsh (凯文·沃什) and current National Economic Council Director Kevin Hassett (凯文·哈塞特) as his top choices. He framed the decision as a choice between “Kevin and Kevin,” praising both individuals while hinting that other candidates remain in consideration. This public endorsement shifts market perceptions, which had recently begun to favor Hassett as the presumed frontrunner. The President’s meeting with Warsh, where he reportedly quizzed the candidate on his willingness to support rate cuts, underscores the paramount importance Trump places on dovish monetary policy.
A Presidential Mandate for Lower Rates and Direct Communication
Trump articulated a clear vision for the next Federal Reserve Chair’s role: to act in concert with the White House on interest rate policy. He lamented the current norm of Fed independence, suggesting that “a smart voice should be heard.” His explicit target for the federal funds rate is “1%, or even lower,” a stance driven by a desire to reduce the U.S. government’s debt-servicing costs on its $30 trillion obligation. This perspective directly challenges conventional central bank orthodoxy focused on inflation mandates, introducing a layer of political risk that global investors, particularly those in rate-sensitive emerging markets like China, must factor into their models.
Profiling the Leading Contenders for the Next Fed Chair
The policy inclinations and professional backgrounds of the two primary candidates offer contrasting templates for future Fed leadership.
Kevin Warsh: The Wall Street Veteran and Former Regulator
Kevin Warsh (凯文·沃什) served as a Fed Governor from 2006 to 2011, appointed by President George W. Bush. His tenure spanned the global financial crisis, giving him firsthand experience with emergency liquidity facilities and bank stress tests. Prior to the Fed, he worked in investment banking at Morgan Stanley and served in the White House under Bush. Market analysts perceive Warsh as a critic of post-crisis quantitative easing programs, potentially positioning him as more hawkish than Trump’s public desires. However, his recent reported assurance to Trump on supporting rate cuts indicates a possible alignment with the President’s agenda. His selection could signal a Fed more attuned to financial market stability but potentially less predictable in its response to political pressure.
Kevin Hassett: The Longtime Trump Economic Confidant
Kevin Hassett (凯文·哈塞特) boasts a longer and more consistent track record within the Trump administration. He served as a senior economic adviser from 2017 to 2019, returned briefly during the 2020 pandemic response, and was appointed Director of the National Economic Council in January of this year. An economist by training, Hassett has historically been associated with supply-side economics and corporate tax cuts. His closeness to Trump suggests a candidate who would likely prioritize growth and employment metrics, potentially through an accommodative policy lens. Hassett himself has downplayed his frontrunner status, noting Trump’s propensity to change his mind, adding an element of uncertainty to the process.
Broader Context: A President at Odds with the Federal Reserve
This selection process cannot be divorced from Trump’s fraught relationship with the current Federal Reserve leadership.
Regret Over Powell and Internal Dissent
Trump openly expressed regret over his 2017 decision to appoint Jerome Powell (杰罗姆·鲍威尔) as Fed Chair, blaming the recommendation from former Treasury Secretary Steven Mnuchin (史蒂文·姆努钦). This admission reveals a deep-seated desire to install a leader more sympathetic to his economic views. The recent Federal Open Market Committee (FOMC) meeting, which resulted in a 25-basis-point cut to a range of 3.5%-3.75%, was marked by significant dissent. Three officials voted against the decision—the most since 2019. Two preferred no cut, while one, Trump’s former adviser Stephen Miran (史蒂芬·米兰), advocated for a 50-basis-point reduction. This split highlights the contentious environment the next Federal Reserve Chair will inherit.
Trump’s Critique of Fed Reaction Function
The President voiced frustration with what he sees as the market’s ingrained expectation that strong economic data automatically triggers fears of Fed rate hikes. “I won’t let anyone at the Fed… automatically jack rates sky-high on good news to crush inflation,” he stated. This critique underscores his preference for a central bank that does not tighten policy preemptively, a stance that, if enacted, could prolong the cycle of easy money and have significant spillover effects on global asset bubbles, including in certain segments of the Chinese property and tech sectors.
The Selection Process and Timeline
The machinery for choosing the next Federal Reserve Chair is in its final stages.
Final Interviews and the Role of Treasury
Treasury Secretary Scott Bessent (斯科特·贝森特) has been involved in interviewing candidates, including current Fed Governors Christopher Waller (克里斯托弗·沃勒) and Michelle Bowman (米歇尔·鲍曼), both Trump appointees. Bessent himself has indicated he is not interested in the role. This narrowing process suggests a decision could be imminent, though Trump has simultaneously claimed he has a favorite while cautioning that the final choice is not yet set in stone. The involvement of multiple figures indicates a comprehensive, if unconventional, vetting process.
Market Expectations and Betting Odds
Financial markets and prediction platforms have closely tracked the odds for each candidate. Hassett had recently been seen as the default favorite, but Trump’s latest comments have buoyed Warsh’s prospects. Investors should monitor shifts in U.S. Treasury yields and the dollar index (DXY) as proxies for market expectations regarding the next Federal Reserve Chair’s monetary policy leanings. For a deeper dive into current Fed policy, refer to the official FOMC statement.
Implications for Chinese Equity Markets and Global Investors
The identity of the next Federal Reserve Chair carries profound consequences for capital allocation into Chinese assets.
Interest Rate Differentials and Capital Flows
A persistently dovish Fed under either Warsh or Hassett would likely maintain lower U.S. interest rates for longer. This scenario narrows the interest rate differential with China, potentially reducing the attractiveness of yuan-denominated (人民币) bonds for yield-seeking foreign investors. However, it could also support global risk appetite, driving capital towards higher-growth equity markets. Chinese A-shares, particularly in sectors like technology and consumer discretionary, could benefit from increased foreign institutional inflow if the global liquidity environment remains flush. Conversely, a Fed that surprises markets by resisting political pressure could trigger dollar strength and capital outflow pressures from emerging markets.
Currency Dynamics and Trade Policy
The Fed’s policy path directly influences the U.S. dollar (USD)/Chinese yuan (CNY) exchange rate. A weaker dollar, facilitated by aggressive Fed easing, could give Chinese policymakers more room to maneuver with their own monetary and credit policies without exacerbating currency depreciation pressures. This could aid the People’s Bank of China (中国人民银行) in its efforts to stimulate domestic demand. Furthermore, the next Federal Reserve Chair’s relationship with the White House will impact U.S.-China trade and investment dialogues. A Fed perceived as aligned with Trump’s economic nationalism could introduce additional volatility into bilateral relations, affecting sectors targeted by tariffs or investment restrictions.
Strategic Considerations for Portfolio Managers
– Monitor U.S. Political Developments: The official nomination and subsequent Senate confirmation hearings will provide critical clues on policy direction. Scrutinize candidate testimonies for views on inflation tolerance, financial regulation, and central bank independence. – Reassess Interest Rate Sensitivity: Review holdings in Chinese real estate investment trusts (REITs), utilities, and high-dividend stocks, as their valuations are closely tied to discount rates influenced by U.S. Treasury yields. – Hedge Currency Exposure: Consider strategies to manage CNY volatility, as the monetary policy divergence between the Fed and the PBOC may widen. Tools might include offshore yuan (CNH) futures or options. – Focus on Quality Growth: In a potentially sustained low-rate environment, emphasize companies in the CSI 300 index with strong balance sheets, sustainable cash flows, and competitive moats, as they are best positioned to attract long-term capital regardless of macro shifts.
Synthesizing the Path Forward for Market Participants
President Trump’s narrowing of the field for the next Federal Reserve Chair has set the stage for a consequential transition in global monetary leadership. The contest between Kevin Warsh (凯文·沃什) and Kevin Hassett (凯文·哈塞特) represents more than a choice between individuals; it is a referendum on the future of central bank independence, the prioritization of growth over inflation containment, and the shape of the global financial order. For sophisticated investors focused on Chinese equities, the imperative is clear: incorporate this political variable into your risk models immediately. The selection will influence everything from the cost of capital for Chinese corporations issuing dollar debt to the valuation multiples applied to high-growth tech stocks in Shenzhen and Shanghai. Stay informed by tracking reliable financial news sources and official announcements from the White House and U.S. Senate Committee on Banking. Proactively adjust your asset allocation to navigate the liquidity and volatility shifts that will inevitably follow the appointment of the next Federal Reserve Chair.