It's another twist in the race for the Fed chairmanship, which is increasingly looking like an episode of The Apprentice.
On Friday, Donald Trump said he wanted to keep Kevin Hassett, until now the frontrunner, in his role as director of the National Economic Council. "In fact, I want to keep you right where you are," he said at a health-related event at the White House. Then, turning to his chief of staff, he added: "We don't want to lose him, Susie (Wiles)."
On Thursday, The Wall Street Journal had already reported that Donald Trump preferred to keep Kevin Hassett in his post, appreciating his defence of the administration's policies during his television appearances.
While his closeness to the president had so far seemed to be Kevin Hassett's main asset, it is now working against him. Not only because Trump does not want to part with him, but also because appointing one of his close allies to lead the Fed is unpopular with both markets and Republican lawmakers.
In late November, when Hassett emerged as the clear frontrunner, the Financial Times reported that bond investors had raised concerns with the US Treasury Department about his possible appointment to lead the Federal Reserve, fearing that he would be too closely aligned with Donald Trump.
More recently, it was the Trump administration's latest offensive against Jerome Powell that weakened this candidacy. Indeed, last weekend we learned that the Department of Justice had subpoenaed the Fed over the renovation of the Fed's headquarters and Jerome Powell's testimony to Congress in June.
The attack drew sharp criticism, including from within Republican ranks. Two senators have threatened not to vote to confirm a candidate to lead the Fed until the matter is resolved. While Fed governors - and even more so the chair - are appointed by the president, the nomination must be approved by the Senate, where Republicans have only a slim majority.
Given the backlash after the threat of indictment against Jerome Powell, it is likely that Donald Trump is now being forced to appoint a candidate who does not appear too closely tied to him. As we wrote last week, Donald Trump's aggressiveness toward the Fed is therefore ending up backfiring on him.
Warsh the frontrunner, Rieder the outsider
Alongside Kevin Hassett, three other candidates are in the running for the Fed chairmanship: former Fed governor Kevin Warsh, governor Christopher Waller and Rick Rieder, BlackRock's head of fixed-income investing.
In recent months, the race had seemed to be between "the two Kevins". Kevin Warsh is now the clear frontrunner. On Polymarket, his odds stand at 61%. According to The Wall Street Journal, Trump was said to have been impressed by Kevin Warsh during an interview in December, telling associates over the holidays that he had been struck by his intelligence and good looks.
In 2017, Donald Trump had already considered Warsh for the job, but ultimately deemed him "too young".
While Warsh is in pole position, the Rick Rieder scenario nonetheless appears to be gaining momentum in recent days. That is what Bloomberg reported over the weekend, after a meeting with Donald Trump on Thursday that reportedly went well.
On Friday, Donald Trump said his choice had been made: "In my mind, it's done." But in recent weeks, he has made this kind of comment several times. "He makes his choice, and he changes his mind too," Kevin Hassett said last month, when he was the clear frontrunner.
"No one knows whom President Trump will choose to lead the Federal Reserve, except President Trump himself," White House press secretary Karoline Leavitt summed up in a statement released on Saturday. "He will soon announce his final decision."
