Potential Decision on Next Fed Chair by Trump Soon
Treasury Secretary Scott Bessent indicated on Tuesday that President Trump’s choice for the next Federal Reserve chair could arrive as soon as next week.
The president has streamlined his options to four nominees to succeed Jerome Powell, the current Fed chairman. The candidates are former Federal Reserve Governor Kevin Warsh, National Economic Council Director Kevin Hassett, Federal Reserve President Christopher Waller, and BlackRock executive Rick Rieder.
“I think the president will probably make a decision next week,” Bessent mentioned during an interview on CNBC’s “Squawk Box.” This conversation took place at the World Economic Forum in Davos, Switzerland.
Bessent elaborated, saying they had several discussions about the potential candidates, narrowing it down from 11 strong contenders to these four. He noted that the president has met each of them in person, emphasizing that it’s ultimately Trump’s call.
In another discussion, Bessent expressed that Powell, who is facing a criminal investigation related to excessive renovations at the Fed’s headquarters, shouldn’t attend the Supreme Court arguments relevant to Trump’s attempt to dismiss Fed Director Lisa Cook.
According to reports, Powell is expected at a lawsuit hearing concerning Trump’s move to fire Cook over alleged mortgage fraud.
“Actually, I think that’s a mistake,” Bessent commented. He noted at Davos that having the Fed chairman involved in such proceedings could be problematic, suggesting it might politicize the Fed.
President Trump has often threatened Powell’s job, criticizing his pace in lowering interest rates. While Powell’s term ends in May, he could technically remain on the board until 2028. So far, he hasn’t indicated whether he plans to stay.
Recently, Powell revealed he is under criminal investigation for reportedly misrepresenting facts during Congressional testimony last summer about the $2.5 billion renovation at the Fed’s Washington, D.C. building.
“The threat of criminal charges appears to stem from the Federal Reserve’s decision-making on interest rates based on thorough assessments rather than succumbing to presidential pressures,” Powell stated in a striking video message.
This situation raises crucial questions about the Fed’s independence and whether it can continue making evidence-based decisions, or if political motivations will start to take precedence.
Trump first nominated Powell for the Fed chair position at the start of his presidency. Recently, Warsh has gained traction over Hassett in prediction markets for the next chair, especially after Trump indicated he prefers Hassett to stay in his current advisory role.
Moreover, Trump has dismissed Bessent’s potential promotion due to his desire to keep his current position.
Market sentiments have shifted against Hassett in the last few weeks, despite Trump’s preference for him to remain in his role; there’s still a possibility he could end up being nominated.
Following the unexpected resignation of Fed Director Adrianna Kugler last summer, Trump appointed Stephen Milan, a former White House economic adviser, to fill the vacancy. However, Milan chose not to leave his White House position entirely, opting for an unpaid leave instead.
