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The US president is expected to announce his selection early next year, with the latest consensus figures suggesting the decision will be made by Kevin Hassett and Kevin Wash. The Fed has adopted a more accommodative path, re-expanding its balance sheet in a very limited way (by purchasing short-term bonds to ensure the smooth functioning of monetary and interbank markets), but the next interest rate cycle remains uncertain and will depend on US labor market data (NFP report) and inflation data to be released in January and February (PCE and CPI index).

But it must be recognized that markets will also be strongly influenced by the so-called “shadow Fed chairman” who will be appointed in January and officially take office in the spring.

Which of Kevin Hassett or Kevin Worsh is considered more dovish in terms of monetary policy outlook?

Today, from a market perspective, Kevin Hassett becomes the most “loose” candidate. He is a growth-focused economist who is sensitive to the impact of financial conditions on investment, labor markets and asset valuations. Historically, Hassett has argued that monetary policy should remain flexible and pragmatic, even if that means inflation continues to be slightly above target, to avoid excessive tightening of financial conditions. His approach is seen as supporting a continued easing trend, or at least a very slow normalization of real interest rates, in the current context of rising public debt and growing market reliance on global liquidity.

In contrast, Kevin Wash embodies a more traditional and disciplined approach to criticism. As a former Fed governor, he has repeatedly expressed reservations about extending unconventional policies, believing that large-scale quantitative easing has led to serious distortions in financial markets and capital misallocation. While aware of current systemic constraints, Warsh may be inclined to limit the Fed’s balance sheet expansion and prioritize the credibility of fighting inflation, even if doing so increases stock market volatility.

The difference between these two scenarios is therefore critical to the future trajectory of risky assets. Kevin Hassett’s selection would reinforce the Fed’s “market-friendly” assumption of maintaining favorable liquidity conditions and implicitly supporting valuation multiples, particularly in the S&P 500. The appointment of Kevin Warsh will introduce a more hawkish bias in the medium term and bring the risk of a reassessment of price expectations

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