Scott Bessent, the U.S. Treasury Secretary, announced plans to present candidates for the next Federal Reserve Chair to President Donald Trump. This decision is anticipated to take place after Thanksgiving, as Trump is scheduled to embark on an Asia trip later this month.
Bessent’s Candidate Selection Process
During a CNBC event at the International Monetary Fund and World Bank meetings in Washington, Bessent revealed he is narrowing down the list of candidates from eleven to five. This selection is critical as it will determine the successor to Jerome Powell, whose term ends in May.
Bessent stated, “We will have to push out the next round to after the Asia trip.” He expressed that Trump will interview three or four candidates but will ultimately make a decision after consulting various advisors.
Impact on Monetary Policy
This candidate selection is being closely monitored globally. A change in leadership at the Federal Reserve could shift its longstanding independence in monetary policy decisions. President Trump has frequently criticized Powell and the Federal Reserve for not lowering interest rates rapidly enough to suit his economic views.
- Trump has suggested interest rates should reach as low as 1%.
- In September, the Federal Reserve cut rates by a quarter percentage point to a range of 4.00% to 4.25%.
- Further rate decreases are expected in upcoming meetings.
Controversies Surrounding Fed Appointments
Additionally, Trump’s attempts to influence the Federal Reserve have led to controversies. In August, he attempted to remove Fed Governor Lisa Cook over unproven allegations, which she has denied. Cook is currently suing to maintain her position, with her case set for a Supreme Court hearing in January.
Timeline for Replacement
Bessent’s comments indicate that the process of replacing Powell could extend into next year, requiring Senate confirmation. Powell, initially appointed by former President Obama and elevated by Trump in 2018, has become a contentious figure in this administration.
Trump has appointed three members of the Federal Reserve Board. Recently, Stephen Miran filled a vacancy on the board, which adds complexity to the selection of Powell’s successor.
Possible Candidates
The remaining finalists for the Fed Chair position include:
- Michelle Bowman (Vice Chair for Supervision)
- Christopher Waller (Fed Governor)
- Kevin Hassett (National Economic Council Chair)
- Kevin Warsh (Former Fed Governor)
- Rick Rieder (Chief Investment Officer for Fixed Income at BlackRock)
Choosing among these candidates is critical, especially given the current state of the Federal Reserve and its approach to monetary policy.
Future Uncertainties
As the process unfolds, uncertainty remains about whether Powell will stay on the board after his term as Chair concludes. His current term as a board member lasts until January 31, 2028, but past behavior suggests former chairs typically do not continue beyond their immediate term.
The outcome of these developments could have significant implications for both the economy and the Federal Reserve’s independence in the coming months.
