Scott Bessent Declines Fed Chair Role as Trump Considers New Candidates

President Donald Trump confirmed that Treasury Secretary Scott Bessent would not be considered as a successor to Federal Reserve Chair Jerome Powell, opting to stay in his current role. Trump disclosed in an interview, “I love Scott, but he wants to stay where he is. I’ll take him off, because I asked him just last night, ‘Is this something you want? Nope, I want to stay where I am.’” 

While Bessent will remain Secretary of the Treasury, the search for Powell’s replacement has narrowed. Trump is considering Kevin Warsh, a former Fed governor, Kevin Hassett, the White House’s top economist, and two other unidentified candidates. Bessent is actively involved in this pursuit, drawing on his experience in trade negotiations, including recent discussions with Chinese trade officials.

Trump expressed his dissatisfaction with Powell due to the absence of interest rate reductions, referring to him as “too late,” “a numbskull,” and “a complete moron.” While Powell has significant influence as the Fed Chair, he is one of 12 voting members on rate decisions. Trump’s persistent criticisms have sparked concerns about political interference affecting the Federal Reserve’s traditional autonomy.

The implications of Trump's rate cut advocacy are multifaceted. Lower interest rates might provide relief to voters struggling with mortgages and loans but could lead to higher inflation, posing a threat to economic stability. Following the Federal Reserve's recent decision to maintain rates, Powell cited tariffs as one of the factors clouding the economic outlook. However, the decision saw dissent from Fed Governor Christopher Waller and Vice Chair Michelle Bowman, who favored a reduction.

The resignation of Fed Governor Adriana Kugler has opened a vacancy on the Board of Governors, giving Trump the opportunity to appoint her successor. Trump announced plans to make this appointment for a limited period of four months, potentially extending into the next Fed chair selection when Powell’s term concludes next year.

Despite Trump’s insistence, Kugler’s resignation letter did not indicate disagreements with Powell over interest rates, although Trump suggested otherwise. Kugler's absence from the Fed's recent meetings, maintaining stable borrowing costs, highlights diverse perspectives within the board. Trump's voiced intention to install a fresh viewpoint underscores the division among policymakers at an unusual juncture.

In addition to Warsh and Hassett, Bessent remains a contender for the Fed chair role, even as he seems inclined towards his current position. The candidate chosen will face Senate confirmation to serve on the Fed's board. The chair can be selected solely from incumbent board members. Even as Powell's tenure approaches its end, his continued presence on the board remains a possibility, which would restrict Trump’s choices to existing members.

As Trump's prospective choice for the Fed chair unfolds, legal ambiguities arise concerning the president’s authority to replace Powell. Powell, completing his term as chair next year, could remain in his role as a Fed governor until 2028. Trump's efforts to appoint a new Fed chair continue amid these legal and administrative complexities, with Treasury Secretary Bessent playing a pivotal role in the advanced search for Powell’s succession.