Who is the better Fed Chair: Hassett or Warsh? The market had largely anticipated Hassett's nomination, but last week, in an interview with the Wall Street Journal, Trump stated that Kevin Warsh was currently the top choice for Fed Chair, while also praising Hassett. As market expectations shifted, while Hassett remains the most likely candidate, Warsh's chances have surged significantly, closing the gap considerably. 1. What are their differences? 1) Background: Warsh: Served as a Fed Governor from 2001-2011, directly involved in Fed decision-making during the financial crisis, possessing extensive experience within central banks. He initially worked at Morgan Stanley and is familiar with Wall Street. Currently a researcher at the Hoover Institution at Stanford University. Hassett: Trump's long-time economic advisor, currently Director of the National Economic Council (NEC). He served as Chairman of the Council of Economic Advisers during Trump's first term, primarily focusing on fiscal policy (such as tax cuts and trade). He holds a PhD in Economics and briefly worked at the Fed in the 1990s, but primarily in a political and economic advisory role. Differences: Warsh is more like a "Fed Insider," with experience closer to monetary policy operations; Hassett is more like a "loyal ally of Trump," with experience leaning towards the White House's economic agenda. This makes Warsh more likely to gain recognition from Wall Street and traditional financial circles, while Hassett is seen as more pro-Trump. 2) Similarities on interest rate policy: Both have recently expressed support for interest rate cuts. When Trump met with Warsh, Warsh clearly stated that interest rates should be lower; Hassett publicly stated that there is "ample room for further interest rate cuts," and even suggested a larger cut (such as 50 basis points). Differences: Hassett tends to favor rapid and aggressive interest rate cuts to stimulate growth; Warsh focuses more on long-term stability and may indirectly lower interest rates through structural reforms (such as ending QE and reducing the balance sheet) to avoid excessive short-term easing leading to inflation. 3) Inflation and monetary policy framework: Warsh: Strongly criticizes the Fed's recent policy "mistakes," believing that inflation is caused by the Fed's "selective errors" (such as excessive easing and reliance on outdated data). He advocates that the Fed return to its core mission: focusing on price stability and avoiding involvement in fiscal or social issues (such as climate and equality). He supports rule-based policies (such as fixed inflation targets) and reduces subjective "data dependence." Hassett: Focuses more on growth and employment, with a relatively moderate view on inflation. Supports low-interest-rate stimulus but emphasizes the Fed's transparency. Historically, he hasn't criticized the Fed framework as frequently as Warsh, and tends to cooperate with fiscal policies (such as tax cuts + low interest rates). Differences: Warsh is more "hawkish" on inflation control, viewing the current Fed as a "mission creep"; Hassett is more "dovish" on growth priority, and may tolerate higher inflation in exchange for jobs. 4) Attitude towards Fed independence Hassett: Recently publicly emphasized that the Fed must be "completely independent," and that Trump's opinions have "no weight" in the FOMC (Federal Open Market Committee). He stated that he would listen to Trump's views, but the final decision would be driven by the committee's data. This is seen as a response to external concerns (fears that he would become a "Trump puppet"). Warsh: Long-time advocate for Fed independence and avoidance of political interference. Historically warned that government influence on the central bank could lead to runaway inflation. More recognized by Wall Street as an "independent". 2. Why did Trump change his attitude? Previously, Trump actually favored Hassett, hinting many times in the first week of December that he would nominate Hassett. However, a major reason for the change in attitude last week was, in my opinion, the concerns raised by some Wall Street executives over a week ago that a Hassett appointment would cause market turmoil, and I believe this concern influenced Trump's decision. Furthermore, Trump's meeting with Warsh on the 10th, where Warsh explicitly stated that "interest rates need to be lower," aligned with Trump's own demand for low interest rates, also changed his perspective. Trump's stance remains consistent: the Fed needs to continue cutting interest rates while also listening to his opinions. However, he cannot ignore the voices of Wall Street. Of course, Trump probably also enjoys the current competition between the two to create suspense. Hassett, due to his pro-Trump background, is more viewed with concern about the potential loss of independence (although he has publicly denied this); Warsh, due to his former Fed affiliation and critical record, is seen as a "traditionalist" capable of maintaining independence. This is why Warsh's presence is more likely when Trump mentions the two – it can reassure the market about concerns about independence. If Hassett takes office: the Fed may be more inclined towards aggressive interest rate cuts (but not particularly extreme), aligning with Trump's economic agenda (such as tariffs + low interest rates), leading to greater controversy over independence. If Warsh takes office: policies will be more balanced and rule-oriented, focusing on balance sheet reduction and inflation control; interest rate cuts may be more moderate; he will be more popular with Wall Street; and there will be fewer concerns about his independence. Ultimately, it depends on Trump's decision.