President Donald Trump is getting ready to find a new leader for the Federal Reserve, the organization that helps manage the country’s money supply and interest rates. He is looking at several people to take over the job from Jerome Powell, who is currently in charge and has less than a year left in his term.
This week, Trump shared that he is looking at “three or four” people for the position of chairperson of the Federal Reserve and may announce his choice before Powell’s term ends in May. The president is hoping to find someone who shares his economic goals as he prepares for a shift in leadership at the central bank of the country.
Leading Contenders for Fed Chair Position
Kevin Warsh: The Perennial Candidate
Kevin Warsh has been trying to secure a leading role in the Trump administration’s economic team since the very beginning of his presidency. It looks like he might finally get his chance.
A former banker from Morgan Stanley and an economic advisor to President George W. Bush, Kevin Warsh became the youngest member of the Federal Reserve Board at just 35 years old in 2006. During the financial crisis of 2007-2008, he acted as the main link between the Fed and Wall Street, and he continued to work at the Federal Reserve until 2011.
Warsh was one of the last candidates considered by Trump to take over as the chair of the Federal Reserve in 2018. However, he did not get the job, which ultimately went to Powell, a Republican already on the Fed with a reputation for working well with both parties. Powell also had a good relationship with the Treasury Secretary at the time, Steven Mnuchin.
After the 2024 election, Warsh was mentioned as a potential candidate for the position of Treasury Secretary under Trump. He has also met with the president at Mar-a-Lago, Trump’s resort in Florida.
“Trump has expressed his wish for the Federal Reserve to lower interest rates, meaning he wants a chairperson who is flexible in their decisions but still respected by the markets.” Analysts at Beacon Policy Advisors suggested that Kevin Warsh could be a good choice for this role.
For a long time, observers of the Federal Reserve have viewed Warsh as the likely successor to Powell, especially because of his close connections with former President Trump and his readiness to challenge the current policies of the central bank. Since Powell took charge, Warsh has openly criticized the Federal Reserve, claiming it uses its independence as an excuse to avoid taking responsibility for its actions.
“Warsh mentioned in a speech at a conference in Washington, D.C., that people often claim the Fed is independent whenever it faces criticism. He believes that this reaction happens too frequently.”
Warsh intensified his criticism recently, calling central bankers “pampered princes” and supporting Trump’s negative comments about the Federal Reserve.
“Central banks were established so that politicians could have someone to hold responsible when things go wrong,” he said. “It’s time to take responsibility and be stronger.”
Warsh has strong political ties to Trump. His father-in-law, Ronald Lauder, who is an heir to a cosmetics fortune, has given a lot of money to Trump and other Republican candidates. He was also reportedly involved in Trump’s attempt to buy Greenland.
Scott Bessent: The Market Whisperer
Treasury Secretary Scott Bessent quickly established himself as Trump’s main negotiator and representative for Wall Street as the president’s challenging approach to tariffs caused turbulence in the financial markets.
The Treasury secretary was actively involved as the stock markets took a downturn, encouraging Trump to concentrate most of his new tariffs on products coming from China.
After President Trump eased concerns in the markets, he sent Bessent and U.S. Trade Representative Jamieson Greer to Switzerland to meet with Chinese officials and help negotiate a peaceful agreement. This mission placed Bessent right in the center of Trump’s inner circle, making him a key figure in the president’s often divided economic team.
Since he started his job, Bessent has been more cautious in how he speaks about the Federal Reserve and its leader, Powell, compared to some of his coworkers at the White House. He has been careful to respect the boundaries that have existed between the Treasury Department and the central bank for over seventy years.
Despite this, Bessent’s strong support for Trump and his reputation in financial markets have made him a candidate to take over from Powell. However, his key role in helping Trump with his economic plans might lead the president to think twice about making any changes to his team.
“The president might not fully realize this situation, but he could think that finding someone to replace Bessent who would gain Wall Street’s confidence could cause unnecessary trouble. This doesn’t mean that Trump wouldn’t prefer Bessent to lead the Federal Reserve, but finding a new person for the Treasury Department could create complications that aren’t necessary,” wrote analysts at Beacon.
Christopher Waller: The Professor
After many years working as a professor of economics and leading research at the Federal Reserve, Christopher Waller was appointed to the Federal Reserve board in 2020 after being nominated by President Trump.
Unlike four of the other individuals nominated by Trump for the Federal Reserve, Waller was approved by the Senate during the last days of the president’s time in office. He has generally agreed with Powell on setting interest rates. However, Waller has shown much less worry about how Trump’s tariffs could raise prices for consumers and has even suggested lowering interest rates as early as July.
“It’s important to take things slowly and gradually reduce the pressure to avoid any sudden surprises. But we should definitely start the process; that’s the main point,” Waller mentioned in an interview with CNBC last week.
“We’ve been holding off on making decisions for the past six months to observe the situation, and so far, the information we’ve seen has been positive. I don’t think we need to wait much longer because even if we introduce tariffs later, the overall impact will remain the same. It should only have a temporary effect and isn’t expected to lead to lasting inflation.”
Waller has brushed off Trump’s ongoing criticism of the Federal Reserve, claiming that the president’s remarks don’t actually affect the bank’s ability to operate independently. In an interview with Bloomberg News following Trump’s victory, Waller stated, “If the president wants to voice his complaints, he can do so just like anyone else. That doesn’t mean I have to pay attention or change our policies because of it, but he has every right to his opinions.”
Michelle Bowman: The Trailblazer
Michelle Bowman, who is the Vice Chair of Supervision at the Federal Reserve, was nominated by former President Trump and confirmed by the Senate in 2018. She was chosen to take the first seat on the Federal Reserve board, a position specifically meant for someone with experience in community banking.
Before becoming a part of the Federal Reserve, Bowman worked as the banking supervisor for the state of Kansas and was also the vice president of Farmers & Drovers Bank.
After staying somewhat under the radar as a member of the Federal Reserve, Bowman received a major promotion when she was nominated by Trump to become the vice chair of supervision at the central bank earlier this year. This new position gives her the responsibility of managing the Fed’s regulatory duties and overseeing the largest and most influential banks in the United States.
Similar to Waller, Bowman has mostly supported Powell’s efforts to relax banking rules and lower interest rates over time. However, recently, Bowman took a different approach and suggested that interest rates should be cut as early as July.
If she is nominated and approved, she will be the second woman ever to lead the central bank. Janet Yellen was the first woman to hold this role before Jerome Powell took over.
Kevin Hassett: The Eternal Optimist
Kevin Hassett has held different economic positions during both of Trump’s terms in office, but he has consistently focused on one main goal: highlighting the positive aspects of the president’s policies, especially when people are unsure about the economy and the direction the country is heading.
Hassett was the leader of the White House Council of Economic Advisers during the first term of Trump’s presidency, acting as the main economic advisor. He played a key role during a period of major changes in tax policy, financial regulations, and trade practices. As the head of the National Economic Council, Hassett focused on shaping and analyzing Trump’s significant trade policies and domestic agenda, which included plans to continue some important tax cuts that were enacted during the first term.
Hassett is known for his cheerful personality, even when he passionately supports Trump and his policies on television — which is an important quality for any of the president’s top advisors. However, as Trump’s disagreements with the head of the Federal Reserve, Jerome Powell, continue to heat up, Hassett has become more critical of the Fed and Powell’s decisions.
In an interview with Fox Business last week, Hassett expressed that “there’s really no valid reason, besides political bias, for the Federal Reserve not to lower interest rates.” He criticized his fellow Republican, Powell, suggesting that his decisions were influenced by politics. Back in April, Hassett also pointed out that he believed Powell was letting partisanship affect his views on important matters.
“Many people who didn’t raise concerns about excessive spending are now warning that tariffs could lead to serious inflation problems. This shows that we need to do a better job at communicating and understanding the situation,” Hassett said.
Background Context Both the Trump and Biden administrations have heard warnings from Powell about the U.S. needing to address its rising debt, which he described as an “unsustainable” situation. Choosing a new chairperson for the Federal Reserve is an important decision for Trump’s economic plans. The Federal Reserve is responsible for making key decisions about money management and interest rates, which have a big impact on the overall economy.
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