Fed Independence Takes Center Stage

In recent public comments, Hassett acknowledged that President Trump holds firm and well-developed opinions on economic policy and interest rates. However, he stressed that the Federal Reserve’s mandate requires decisions to be made independently of political preferences. According to Hassett, interest rate policy should emerge from collective judgment within the Federal Reserve System, shaped by the Board of Governors and the Federal Open Market Committee (FOMC), rather than by directives from any single political authority.

This stance comes amid renewed debate after Trump suggested that presidents should have more influence over monetary policy. Hassett’s response positions him as a defender of institutional credibility, reinforcing the Fed’s role as a data-driven and consensus-based policymaker.

A Dovish Profile with Clear Boundaries

Market participants broadly view Hassett as a dovish figure. He is widely associated with a growth-oriented approach to monetary policy and has shown openness to meaningful rate cuts if economic conditions warrant them. This reputation has fueled expectations that a Hassett-led Fed could lean toward supporting economic expansion, even if inflation risks remain present.

That said, Hassett has drawn a clear distinction between policy flexibility and political alignment. While his economic views may partially overlap with Trump’s calls for aggressive rate reductions, he has consistently underlined that monetary decisions must be anchored in macroeconomic indicators rather than political pressure.

The Fed Chair Race Gains Momentum

Prediction markets have added another layer of intrigue to the unfolding leadership transition. Current odds place Hassett as the frontrunner for the Fed chair position, with a probability exceeding 50%. Former Federal Reserve Governor Kevin Warsh follows closely behind, having seen a sharp rise in expectations after a recent meeting with Trump.

With the current Fed Chair’s term scheduled to conclude on May 15, the timeline for a decision is becoming increasingly relevant for global markets.

Implications for Bitcoin and Risk Assets

For investors in Bitcoin and other risk-sensitive assets, the prospect of future Fed rate cuts remains a critical driver of sentiment. Expectations of looser monetary policy are often associated with increased liquidity and higher risk appetite. Hassett’s dovish reputation supports these hopes, while his emphasis on central bank independence offers reassurance of policy stability.

As the Fed leadership question moves closer to resolution, markets will continue to assess not only who takes the helm, but also how their philosophy may shape the next phase of U.S. monetary policy and global financial conditions.

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Two Prominent Names for the Fed Chairmanship

According to Trump, two candidates stand out in the race to lead the Federal Reserve: former Federal Reserve Governor Kevin Warsh and current Director of the National Economic Council Kevin Hassett. Speaking from the Oval Office, Trump described both figures as highly capable, noting that Warsh remains near the top of his list despite growing speculation that Hassett may be the frontrunner.

Trump emphasized that discussions with potential candidates are ongoing and that no final decision has been made. His comments suggest that the selection process remains fluid, with both experience inside the Fed system and alignment with broader economic priorities playing a role.

A Clear Call for Lower Interest Rates

Lower interest rates remain a central pillar of Trump’s economic outlook. He confirmed that during a recent meeting with Kevin Warsh, the issue of rate cuts was directly addressed. Trump stated that, in his view, there is broad consensus among policymakers and advisors that interest rates should move lower.

Looking ahead, Trump said he would like to see rates fall to around one percent within the next year, or potentially even below that level. He argued that such a shift would materially reduce the financing burden of the United States’ roughly 30 trillion dollar public debt and strengthen the country’s competitive position globally.

Consultation with the White House: A Controversial View

Perhaps the most contentious element of Trump’s remarks was his assertion that the Fed Chair should consult with the President on interest rate decisions. While stressing that this would not mean direct political control over the central bank, Trump maintained that presidential input should be taken seriously, noting that similar practices were more common in earlier decades.

These statements have revived longstanding debates around central bank independence and the appropriate boundaries between monetary policy and political leadership.

Reflections on Past Decisions

Trump also reflected critically on his earlier choice of Jerome Powell as Fed Chair, suggesting that he relied too heavily on external advice at the time. He indicated that this experience has made him more cautious as he evaluates candidates for the role going forward.

As markets watch closely, the eventual appointment of the next Fed Chair is likely to shape expectations around U.S. monetary policy, government debt management, and global financial conditions in the years ahead.

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In particular, the latest remarks from Mark Cabana, a former New York Fed repo expert who is now working at Bank of America, have once again brought the possibility of a new wave of liquidity to the agenda. However, one critical point must be clearly underlined: These assessments are not an official decision for now, but merely Cabana’s projections based on market dynamics.

What Does Mark Cabana’s Liquidity Scenario Suggest?

According to Mark Cabana, Fed Chair Jerome Powell could put on the table a move to launch approximately $45 billion per month in Treasury bill (T-bill) purchases following this week’s FOMC meeting. It is stated that:

• $20 billion of this amount could be used to meet reserve needs in line with growing public liabilities,

• $25 billion could be allocated to replenish reserves that have been drained in the repo market.

According to Cabana, this process may not technically be labeled as “QE” (quantitative easing). However, since it would imply balance sheet expansion, it could effectively function as a mechanism that injects new liquidity into the market.

The Claim That “QT Is Over, the Liquidity Tap May Be Reopened”

One of Cabana’s most striking comments is his assessment that the quantitative tightening (QT) process may have effectively come to an end. According to him:

• At the December meeting, the Fed may not only implement a 25-basis-point rate cut,

• But may also quietly reopen the liquidity channel.

If this scenario materializes, starting from January:

• Monthly T-bill purchases of $40–45 billion,

• And term repo operations

could begin supplying additional reserves to the market.

Even if it is not officially called “QE,” such a step—implying balance sheet expansion—could serve as a strong short-term support factor for equities, crypto assets, and other risky instruments.

What Would Be the Market Impact If This Scenario Occurs?

Such liquidity expansion could technically be reflected in the market through several channels:

• Treasury bill purchases reduce the use of the RRP (Reverse Repo Facility),

• A drawdown in the RRP increases net system liquidity,

• Rising liquidity strengthens appetite for risk assets.

However, with Cabana’s own warning, such temporary liquidity support mechanisms could also lay the groundwork for greater valuation pressures in the long term.

What Do Institutions Expect from the Fed?

Bank of America’s View

According to Bank of America, even if the Fed continues to use cautious language, markets may begin to price in more aggressive rate cut expectations for January. The bank forecasts:

• A 25-basis-point cut in December,

• But also tighter forward guidance,

• And the possibility of several dissenting votes in the decision process.

Morgan Stanley’s Assessment

Morgan Stanley, taking into account recent Fed statements and market pricing, states that a 25-basis-point rate cut at the December meeting has now become a strong probability. According to the bank, the gap between market expectations and the Fed’s communication is narrowing.

A Striking Message from Hassett

Kevin Hassett, one of the White House’s economic advisers, also argues in his assessment of the Fed that the time has come to begin rate cuts in a cautious manner. This view is interpreted as a message in line with the shift signals expected by the markets.

What Do CME FedWatch Data Say?

Data from the CME FedWatch Tool, one of the most closely followed indicators in the futures market, show that investor expectations are shaping as follows:

• Probability of a 25-basis-point rate cut: 87.4%

• Probability of rates being left unchanged: 12.6%

These figures indicate that a rate cut at the December meeting has almost become the “base case” for the markets.

*This content does not constitute investment advice.

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Liquidity Expansion and Fed Expectations Shape Market Outlook

Coinbase highlights that the expansion in global M2 money supply and the growing probability of a December rate cut—now exceeding 90 percent—are setting a supportive backdrop for digital assets. In its latest assessment, the institution noted that strengthening liquidity conditions, combined with expectations of monetary policy easing, may help crypto markets regain momentum before the year ends.

The firm previously signaled in October that a market shift was likely toward the end of the year, driven by trends in global money supply. Despite these improving macro indicators, investor sentiment remains deeply cautious. Both institutional and retail participants appear reluctant to increase exposure, and weaker ETF inflows have left the broader market in a holding pattern.

Powell’s Messaging Could Set the Tone for Early 2026

A potential rate cut in December could trigger a short-term year-end rally similar to traditional market patterns. However, what comes after that may depend largely on Powell’s forward-looking guidance.

Nic Puckrin, analyst and co-founder of Coin Bureau, argues that easing monetary policy would remove a significant barrier for Bitcoin, opening the door to renewed upside. Yet he emphasizes that markets will scrutinize every element of Powell’s press conference. Even a slightly hawkish tone, he notes, could limit the strength of any rally.

Technical Signals Improve, but Macro Drivers Dominate

Some analysts attribute November’s selling pressure to earlier hawkish Fed commentary but believe December could mark the start of a rebound. Chris Kim, CEO of Axis, points out that Bitcoin has already retested the $80,000 range and its 100-week moving average, both of which signal underlying resilience. He also notes that expanded ETF trading access is adding incremental support.

Looking further ahead, speculation surrounding the potential appointment of Kevin Hassett as the next Fed Chair in 2026 has introduced expectations of a more dovish policy stance. Such a shift could provide a meaningful long-term tailwind for crypto markets.

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CME Data: Where Do Rate Expectations Stand?

The FedWatch Tool shows a divided market outlook ahead of the December 10 FOMC meeting:

• 350–375 bps: 52.1%

• 375–400 bps (current level): 47.9%

The narrow gap between the two outcomes highlights persistent uncertainty. While the market is leaning slightly toward a rate cut, confidence remains weak and highly sensitive to incoming data.

Mixed Signals From Federal Reserve Officials

Comments from Fed policymakers offer little clarity regarding the December decision. Their statements reflect both caution and concern, making it difficult for markets to form a definitive expectation.

Fed official Hammack outlined several risks and pressures shaping the outlook:

• The unemployment rate is near its maximum sustainable level.

• Inflationary pressures remain elevated.

• Monetary policy may need to stay “restrictive” for longer.

• Inflation is still high and appears to be firming rather than easing.

• Softening labor market conditions are complicating the Fed’s employment mandate.

These remarks imply that the Fed may not be in a rush to pivot toward easing.

Similarly, Neel Kashkari maintains a cautious stance, emphasizing that inflation remains around 3%. He noted that he has “no strong inclination” toward a December rate cut at this stage.

Data Gaps Add to Market Uncertainty

The 43-day U.S. government shutdown created additional complications for economic forecasting. The disruption prevented the release of complete labor-market data for October.
White House officials acknowledged that the true unemployment rate for the month may remain unknowable.

Senior Adviser Hassett explained that only part of the employment report could be produced, meaning the unemployment component would not be fully captured. Although the government reopened on October 13, the missing dataset adds another layer of ambiguity to the Fed’s assessment process.

A Fragile Outlook Ahead of the December Meeting

While market pricing has shifted back toward favoring a December rate cut, the direction remains far from certain. High inflation, uneven labor-market indicators and cautious commentary from Fed officials all challenge the likelihood of a decisive policy shift.

As a result, the December meeting is shaping up to be one of the most pivotal of the year — a moment when clearer data and a more unified stance from policymakers will be essential for establishing the next phase of monetary policy.

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Hassett: “The Judges’ Decision Will Be Overturned”

Stating that they expect the court ruling on tariffs to be annulled, Hassett spoke clearly about the legal process:

“The judges’ decision will be overturned. We believe it’s just a matter of time.”

This statement is being closely followed by companies involved in foreign trade and imports, as potential changes in tariff regulations could directly impact the global trade balance.

New Trade Deals on the Way

Hassett also shared important information about the U.S. trade diplomacy. He noted that three major trade agreements have already been concluded, and signaled that more deals will be announced in the coming weeks:

“Basically, three trade deals have been made. But this is just the beginning. Many more are coming in the next few weeks.”

This announcement indicates that the U.S. is entering a new phase in its foreign trade policies.

Multiple Options on Trump’s Desk

The economic wing of the White House emphasized that President Trump has a wide range of options when it comes to tariffs. Hassett stated that the President has many alternatives in front of him and that every scenario is being thoroughly evaluated:

“President Trump has different options on this issue, and serious work is being done on all of them.”

Why Are Tariff Decisions Important?

Tariffs do not only affect importers and exporters, but also directly influence consumers. High tariffs increase product costs, while low tariffs can create a competitive advantage. Therefore, the upcoming decisions are of critical importance not only for the U.S. but also for the global economy.

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