Bessent Emerges as Potential Fed Chair Amid Political Pressures

Scott Bessent, the current U.S. Treasury Secretary and a known advocate for Bitcoin, has surfaced as a potential candidate to replace Jerome Powell as the next Federal Reserve Chair. This development comes as Powell's term, which extends through May 2026, is under scrutiny due to intensifying political and economic pressures. President Donald Trump has repeatedly criticized Powell's cautious monetary approach, accusing the Fed of being too slow to combat inflation and economic struggles. Trump has persistently called for the central bank to lower interest rates, even threatening to fire Powell in favor of a more aligned candidate.

Bessent's candidacy is notable for several reasons. As Treasury Secretary, he has traditionally played a key role in the search and interview process for the next Fed chair. However, it remains unclear whether he would recuse himself from this process given his own candidacy. His pro-Bitcoin views could influence the Fed's stance on digital currencies, potentially leading to more favorable policies for cryptocurrencies. Bessent, who oversees major financial policies, including the US Strategic Bitcoin Reserve initiative, neither confirmed nor denied interest in the Fed chair role when reached out by Bloomberg. “I have the best job in Washington,” Trump’s Treasury Secretary said in a statement. “The president will decide who’s best for the economy and the American people.”

Regardless of Bessent’s presence in the small candidate pool, the name of Powell’s successor is expected to be announced “very soon,” according to President Trump. The reason behind the move is intensifying political and economic pressures. Trump’s shortlist also features seasoned economic policymakers such as Kevin Warsh, who was previously vetted for Treasury secretary, NEC Director Kevin Hassett, Fed Governor Christopher Waller, and ex–World Bank chief David Malpass. The Fed has mostly maintained silence on policy decisions without directly engaging in political disputes.

The emergence of Bessent as a candidate has also highlighted the growing divide within the Republican Party regarding economic policies. There have been debates over the looming expiration of the 2017 tax cuts and the potential impact of the proposed "Big, Beautiful Bill" on the economy. Rep. Thomas Massie (R-Ky.) has pushed back against the administration’s claims regarding the tax cuts, warning of the potential for inflation and harm to middle-class families. This exchange underscores the complexities and divisions within the party, particularly concerning budget, inflation, deficit spending, and special interest carve-outs.

Bessent's potential nomination has also drawn attention to the broader economic landscape. The Cleveland Fed's Inflation NowCasting model forecasts a May CPI of +2.40% YoY and an annualized Q2 CPI of +1.70%. These forecasts suggest a moderate inflationary environment, which could influence the Fed's monetary policy decisions under a new chair. Bessent's pro-Bitcoin stance and his views on economic policy could shape the Fed's approach to managing inflation and promoting economic growth.

The potential nomination of Bessent as the next Fed chair has sparked discussions about the future of the Federal Reserve and its role in the economy. His pro-Bitcoin views and his experience as Treasury Secretary make him a strong contender for the position. However, the growing divide within the Republican Party and the broader economic landscape will also play a significant role in shaping the Fed's future direction. As the search for Powell's successor continues, all eyes will be on Bessent and his potential impact on the Federal Reserve and the economy.