Trump's Fed Hunt Navigates Diverging Policy Visions and Market Stability

The Federal Reserve has narrowed its search for a new chair to five finalists, with President Donald Trump signaling a decision could be made by year-end, according to Treasury Secretary Scott Bessent. The candidates include current Fed board members Christopher Waller and Michelle Bowman, former Fed governor Kevin Warsh, White House National Economic Council director Kevin Hassett, and BlackRock Inc. executive Rick Rieder, Bessent confirmed during a press briefing on Air Force One. The selection process, which involves a second round of interviews, aims to present a "good slate" of candidates to Trump after the Thanksgiving holiday, according to a Business Times report.

Trump, who has repeatedly criticized outgoing Fed Chair Jerome Powell for maintaining high interest rates, reiterated his expectation of finalizing a nominee before 2025 concludes. "We have a person who is not at all smart right now," he said, echoing past criticisms of Powell's economic stewardship. The president also clarified that he does not anticipate Bessent leaving his Treasury role to lead the Fed, according to a Bloomberg article. The next chair is likely to be appointed to a 14-year Fed governor term, which becomes available in early 2026, with Powell's current chairmanship set to expire in May 2026, according to a Zawya article.

Fed policymakers are widely expected to cut interest rates by 25 basis points at their Oct. 29 meeting, following a similar reduction in September. This would mark the second consecutive rate cut, a shift from Trump's earlier demand for a more aggressive three-percentage-point reduction. The central bank's policy trajectory remains a focal point as markets weigh inflation data and economic signals ahead of potential changes in leadership. The Business Times also noted this market focus earlier in its coverage.

The finalists represent a mix of central banking veterans and private-sector economists. Waller and Bowman, both current Fed officials, are seen as moderate voices within the institution, while Warsh, a former Fed governor, has long advocated for market-driven approaches to monetary policy. Hassett, a Trump ally, brings a strong hawkish stance on inflation, and Rieder, BlackRock's chief investment officer, offers expertise in global markets, as detailed in the Bloomberg coverage.

Bessent emphasized that the selection process balances diverse perspectives with the need for a candidate who can navigate the Fed's complex mandate. "We're going to do a second round, and we hope to present a good slate to the president right after Thanksgiving," he said, according to an Investing.com report. The outcome could shape the Fed's approach to inflation, employment, and financial stability in the coming years, particularly as the U.S. economy faces ongoing challenges from global markets and domestic policy shifts.