You Decide: Which Kevin Will Win?

By Mike Walden

There’s a new battle going on between two individuals named Kevin. No, they are not boxers, nor are they involved in any sport. Instead, they are competing for one of the most important positions in Washington: chair of the Federal Reserve.

Why should you be interested in this battle? The answer is simple. The Federal Reserve (the Fed) is one of the most important agencies in Washington, and the chair is the head of that agency. Some have called the Fed chair the second most powerful person in Washington, behind only the president.

While the Fed has numerous duties, the one that impacts all of us is called monetary policy. Monetary policy involves the Fed using its powers to influence interest rates and the supply of money to impact economic growth, inflation and unemployment.

How? The Fed meets every six weeks to vote on monetary policy. If the Fed wants to stimulate economic growth and lower unemployment, it will reduce the interest rate it directly controls and expect other interest rates to follow. It will also push more money into the economy. Usually, both of these actions will result in more borrowing, more spending and more jobs.

In contrast, if the Fed is worried about inflation, it will move in the opposite direction by increasing its interest rate and reducing the money supply. Ultimately, these actions will cause borrowing, spending and job creation to slow. But with spending slowing, there will be less upward pressure on prices, meaning the inflation rate — which measures how fast prices are rising — will subside. The key risk is if the economy slows too much, a recession could occur.

These decisions are made by a 12-member group at the Fed called the Federal Open Market Committee (FOMC). Just like each member of the FOMC, the Fed chair has one vote in the FOMC’s deliberations. However, the influence of the chair goes beyond these votes. The chair sets the agenda for discussions, effectively serves as the spokesperson for the Fed, testifies before Congress and works to build consensus among FOMC members.

The bottom line is the Fed chair is a big deal. The chair must be a member of the Fed’s board of governors who vote on Fed policy. The president appoints the chair with confirmation by the Senate. The chair can be reappointed as long as the individual remains a Fed governor, which has a 14-year term.

The current Fed chair, Jerome Powell, is in his second term. But President Trump has said he will not reappoint Powell to a third term because he has disagreed with Powell’s views about monetary policy. While the Fed has been pushing interest rates lower, the president thinks the interest rate cuts have been too small.

This means a new Fed chair will take over in May 2026. Recently, President Trump announced he had settled on two individuals to be finalists: Kevin Hassett and Kevin Warsh, hence the battle of the Kevins.

Both Kevins are accomplished, but in different ways. Kevin Hassett is a Ph.D. economist who has taught at the college level, has worked for think tanks, and has been a member of both Trump administrations, serving as chair of the President’s Council of Economic Advisors in the first term and currently as director of the National Economic Council in the second term. This means he has been a key economic adviser to the president.

Kevin Warsh is a lawyer, has worked on Wall Street, has served in the federal government, has been affiliated with Stanford University, and has been on boards of directors for corporations. Perhaps his most significant job was serving on the board of governors of the Fed during the “Great Recession” of 2007-09 when the financial and housing markets were crashing.

The Fed was established as an independent agency. Other than nominating members, the president is not given a formal role with the Fed. President Trump is not the first to complain about Fed policies. In most cases, like President Trump, presidents have complained the Fed has kept interest rates too high. Presidents tend to have short-run views because their term is only four years. With Fed governors having 14-year terms, their viewpoints tend to be much longer.

Again, like most of his predecessors, President Trump would like a Fed chair who shares his economic views, like lower interest rates. My guess is both Kevins will indicate to President Trump that they, too, would like to see interest rates lower. But timing is also a key factor. How fast would the Kevins like to see rates drop? And even if they want a quick reduction in interest rates, the chair has only one vote among 12.

Ultimately, the Federal Reserve tries to keep the economy growing with low unemployment and low inflation. This is a tall task, but we have had periods with this kind of success. Alan Greenspan, who will turn 100 years old in late January, was Fed chair during the 1990s, a decade of low inflation, low unemployment, strong growth and a federal budget that went from deficit to surplus. While the Fed was not solely responsible for this success, Greenspan has been called the “maestro” of the economy.

Do we have a new “maestro of the economy” waiting with one of the two Kevins? You decide.

Mike Walden is a William Neal Reynolds Distinguished Professor Emeritus at North Carolina State University.