MW Trump would be smart to pick this 'battle-tested' market expert to lead the Fed

By Louis Navellier

Why Neel Kashkari has the inside track to replace Fed Chair Jerome Powell

We are still in the early innings of a global interest-rate collapse. Falling global yields will drive Treasury yields lower and cause the Fed to follow.

U.S. Federal Reserve Chair Jerome Powell is now a lame duck. Powell has lost control of the Federal Open Market Committee (FOMC), as seen in recent split votes on key interest-rate changes. Powell was also an irritant during President Donald Trump's first term, even though Trump appointed him. Clearly, Trump will name a new Fed chair when Powell's term expires on May 15, 2026.

I believe Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, has the inside line to be the next Fed chair. Let me provide a bit of insight into Kashkari. First, he ran the Troubled Asset Relief Program (TARP) under former U.S. Treasury Secretary Hank Paulson in the George W. Bush administration.

Kashkari then moved to Truckee, Calif. and wrote and spoke extensively about the Great Financial Crisis. He ran for California Governor as a Republican in 2014 against Democratic incumbent Jerry Brown, which was essentially a political suicide mission. Kashkari was appointed to his current position in 2016 after a national search conducted by an independent board of directors.

Kashkari is by far the best communicator at the Fed. For example, he said immediately after the January payroll report that the U.S. labor market has cooled but remains solid, and predicted that interest rates are likely to decline "modestly." Kashkari said about the U.S. labor market, "It's not as hot as it was a year or two ago," and added that "the economy is strong, businesses are optimistic." He was right.

Kashkari elaborated, saying, "We're in a very good place to just sit here until we get a lot more information on the tariff front, on the immigration front, on the tax front." He concluded by saying, "I would expect the federal funds rate to be modestly lower at the end of this year."

This dovetails with my own forecast that falling global yields will drive Treasury yields lower and cause the Fed to follow market rates in the upcoming months.

These comments also are exactly what Trump wants to hear from Fed officials.

As Treasury yields decline, the Fed will be forced to cut key interest rates in the upcoming months.

The truth is that we are still in the early innings of a global interest-rate collapse. First, China's long-term bond yields fell below Japan a while ago and it appears that due it China's (1) demographic problems causing its population to shrink, (2) domestic real estate crisis and (3) lackluster economic growth as well as deflationary forces, China is the "new Japan" and its key interest rates are expected to at or near zero in the upcoming months and stay there for possibly two decades or more.

Second, the largest economies in Europe, namely the U.K., France and Germany are in the midst of a growing political crisis that has resulted in each country slipping into an economic crisis.

What the U.K. and Germany have in common is both countries embraced green energy that does not work well in the winter months. In the U.K., half of households have to be subsidized to pay their electric bills. The solar- and wind power in Germany, which can generate up to 70% of its electricity in the summer, falls to barely 4% in the winter when something called a "dunkelflaute" emerges, which is the German word for "dark doldrums."

Due to the fact that Europe's three largest economies are in their own dunkelflaute, both the Bank of England and the European Central Bank will likely cut key interest rates at least three to four more times this year, which should contribute to government-debt yields declining worldwide, including U.S. Treasury yields.

Since the Fed cannot fight market rates, as Treasury yields decline, the Fed will be forced to cut key interest rates. Kashkari was the first Fed official to signal that further interest-rate cuts are coming this year. He's battle-tested and Trump would be smart to make him the next Fed chair.

Louis Navellier is founder and chief investment officer of Reno, Nev.-based Navellier & Associates,Inc., a SEC-registered family office that manages more than $1 billion. He is the author of "The Sacred Truths of Investing: Finding Growth Stocks that Will Make You Rich." (Wiley, 2025).

More: Powell warns that delaying interest-rate cuts could 'unduly' hurt the labor market

Plus: Senate Democrat Warren urges Powell to cut interest rates in March

-Louis Navellier

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February 11, 2025 15:42 ET (20:42 GMT)

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