Trump Narrows Fed Chair Shortlist as Bessent Declines Nomination

President Donald J. Trump is narrowing his shortlist for the successor to Federal Reserve Chair Jerome Powell, whose term is set to expire in May 2025. As the timeline for a nomination announcement tightens, the president has confirmed that Treasury Secretary Scott Bessent has declined the role, leaving a shortlist of candidates who are broadly seen as more favorable to lowering interest rates. Among those emerging as top contenders are Kevin Warsh, Kevin Hassett, and Christopher Waller, each with distinct economic perspectives and policy histories that may influence the Fed’s direction under Trump’s leadership.

Bessent’s name had initially been speculated as a top candidate, given his proximity to the administration and economic background. However, he declined the opportunity, emphasizing his preference to continue working at the Treasury Department. Trump expressed appreciation for Bessent’s decision, saying he valued his commitment to his current role. With Bessent out of the running, the president has reportedly narrowed the field to four potential nominees, all of whom are expected to adopt a more accommodative stance toward rate reductions.

Kevin Warsh, a former member of the Board of Governors from 2006 to 2011, has long been considered a strong contender. He is currently a visiting fellow at the Hoover Institution and a lecturer at Stanford. Warsh has consistently advocated for a more aggressive approach to rate policy, arguing that the Fed is overly cautious and bound by outdated models. His views align with the White House’s push for lower rates, and ING analysts noted that his nomination would likely support the U.S. dollar due to his perceived hawkish tendencies on inflation control [1].

Another prominent name is Kevin Hassett, currently the Director of the National Economic Council. Hassett has played a central role in Trump’s economic policy, including negotiations over new tariffs and legislative efforts. According to prediction markets, Hassett has the highest probability of receiving the nomination, at 41%, compared to Warsh’s 29%. However, concerns about the independence of the Federal Reserve may influence the final decision. Hassett has also commented on the need for transparency in economic data, a subject that has drawn scrutiny in recent weeks following the abrupt dismissal of the Bureau of Labor Statistics chief [2].

Christopher Waller, a current Fed governor, has also been identified as a possible candidate. His recent dissent from the Fed’s decision to hold rates has drawn attention, with some analysts suggesting he is positioning himself for a leadership role. Waller has long argued for a rate cut, and his nomination could signal a more rapid shift in monetary policy. UBS economist Paul Donovan noted that Waller’s recent actions could be interpreted as an overt attempt to gain favor with the administration [3].

In addition to these top three candidates, Fed Governor Michelle Bowman has also been mentioned as a potential nominee. Like Waller, she dissented from the recent rate decision, advocating for a gradual return to neutral policy. Bowman emphasized that the U.S. labor market remains near full employment and that rate cuts could help mitigate risks to economic growth.

Other names occasionally floated in media speculation include economist Judy Shelton, who was previously nominated by Trump but failed to gain Senate confirmation. Shelton has long advocated for a looser inflation target and a more direct alignment with the administration’s economic goals. Her views have raised concerns among some economists about central bank independence, a core principle of the Fed’s institutional design.

The administration’s push for a new Fed chair who supports rate cuts is expected to have a significant impact on monetary policy and financial markets. However, the White House is also mindful of the need to preserve the Fed’s independence, as highlighted by past tensions over Powell’s leadership. Analysts will be closely watching how the final decision is made and whether it includes any unexpected names or shifts in the current trajectory of Fed policy.

The outcome could influence inflation expectations, currency valuations, and broader economic sentiment, particularly in the lead-up to the 2024 presidential election. As the shortlist continues to narrow, the final decision may soon be announced, reshaping the landscape of U.S. monetary policy for years to come.

Source: [1] https://fortune.com/2025/08/06/trump-shortlist-fed-powell-warsh-hassett-waller/