The U.S. dollar weakened after markets sharply increased the odds of Kevin Hassett being nominated as the next Federal Reserve chair, according to Mizuho Securities. Said traders are not questioning the Fed’s independence based on policy signals alone, with senior officials including John Williams, Chris Waller and Mary Daly all openly supporting another cut next month.
However, analysts noted that investors are starting to price in the risk that a Hassett nomination could politicize the central bank, a dynamic they dubbed the “Hassett effect.” This perception, they said, weighs on the dollar by raising concerns about future policy direction and the possibility of a more politically compliant Fed. Until these doubts fade, he warned, the threat of dollar “debasement” will remain elevated.
Mizuho info via a Wall Street Journal report.
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A politically motivated rate cut to please Trump is not necessarily going to be a done deal even if Hassett gets the gig:
