Cut rates, be proactive and look good: How Trump is picking a new Fed chief

The Wall Street Journal reported last week that U.S. President Donald Trump could name a nominee for Fed chairman as early as September-October or even this summer. 

This is an atypical move: the term of office of current U.S. central bank chief Jerome Powell expires in May 2026, and usually the transition period begins three to four months before that. Back in the spring of this year, the WSJ wrote that the White House might just start interviewing candidates for the post about six months before Powell's term ends;

But that has now changed. Such a rush is due to Trump's displeasure that the Fed is refusing to cut rates as he has publicly demanded. 

«If I think someone is going to leave rates at the current level or something like that - I'm not going to appoint him. I will appoint someone who wants to lower rates. There are a lot of people like that,» the president told reporters on June 27 (quote via The New York Times). But as it turns out, a willingness to ease monetary policy is not the only requirement for candidates. 

What is known about the potential candidates for the post of the Fed chief and what are the chances of each of them to take the post of the chairman of the «world's main central bank»?

He is a former member of the Fed's Board of Governors. For the past few months, he has been named the most likely candidate to head the U.S. central bank, according to The Washington Post and Reuters. According to MarketWatch, Wall Street sees him as the top contender to head the Fed. 

In 2006, Warsh became the Fed's youngest governor, Barron's writes. He was also the liaison between the regulator and Wall Street, which was gripped by panic during the 2008 crisis. The Fed chairman at the time was Ben Bernanke.

Warsh still supports his decisions (it was Bernanke who started the program of large-scale paper buying in response to the crisis). However, he retired from the Fed in 2011 because he was against the regulator continuing to buy assets and increase its balance sheet, as he considered it an excessive intervention in the economy, which also leads to an increase in the national debt.

The WSJ wrote back in the spring of this year that Trump had discussed appointing him if Powell was fired early in February. Warsh opposed firing the current chairman at the time. 

The newspaper also recalls that Trump interviewed Warsh for the post of Fed chief back in 2017, in his first presidential term. But the latter lost to Powell then. «I'd be very pleased with you. I could have used you here. Why weren't you persistent enough if you really wanted the job?» - Trump told Warsh in January 2020, writes Washington Post. 

Apparently, Warsh has learned his lesson and now actively and regularly criticizes the Fed's current policy, calling for a radical change of vector. Back in January, in an op-ed column for the WSJ, he wrote that the Fed was looking for scapegoats to explain high inflation instead of recognizing that public policy (i.e., the Biden administration's decisions) was to blame. The talking points outlined in the column were later often repeated and supported by White House officials, noted Yahoo Finance. In May, he called nonsense the Fed's idea that lower inflation is invariably accompanied by damage to the labor market and leads to higher unemployment. In April - accused the regulator of distraction and inconsistency that led to a spike in inflation and budget deficits. At the time, he also called for a «strategic reset» of the central bank. 

American Forbes wrote that most Republicans are backing Warsh's candidacy because they see him as a «grown-up» they know how to deal with. However, Yahoo Finance, citing its sources, wrote that the president has begun to lose interest in his candidacy because of his tough stance on keeping inflation low. Forbes even considers Lesson dangerous for the market as a candidate: «Markets just exist. They are a mirror. The only real crisis is a crisis of intervention, and the «adult» Warsh embraces intervention in certain situations. And intervention, by its very definition, is the source of crises.»

On the prediction market platform Polymarket, his last name has been marked «No» since Monday: users are no longer betting that the former member of the Fed's Board of Governors will get the chairmanship. 

But opposite the name of Treasury Secretary Scott Bessent on the same platform on Monday, there is a «yes»: users were betting on him. His name has been cited by The Hill, Bloomberg, Reuters and others as a candidate to head the Fed. 

The 62-year-old financier has an established Wall Street reputation - he is the founder and former CEO of hedge fund Key Square Capital Management and was previously managing partner at Soros Fund Management.

As the NYT writes, investors still believe Bessent because he helps them understand President Trump's actions.

Bessent is known for his active role in implementing Trump's economic policy, trade strategy and executive direction. He is a key figure in negotiations with China over duties. It was he, by the way, who, even before coming to the White House expressed the idea to create the position of the «shadow» head of the Fed, that is, to name Powell's successor long before the end of his term. 

«Scott Bessent has shown in a challenging first six months that he is capable of implementing Trump's agenda. He is not just a cabinet star, but a solid choice for global financial markets,» shared his opinion with Bloomberg by former Trump senior adviser Steve Bannon. 

The Economic Times wrote that investors are reacting positively to rumors of Bessent's possible appointment as Fed chairman - they see it as a promise of monetary easing. 

But despite his good working relationship with the president, public support for his decisions and extensive experience, Bessent is unlikely to become Fed chairman, accounts the NYT: Many in the Trump administration would prefer he stay in his seat.

There is another problem - if Bessent's nomination becomes official, there will be a conflict of interest. The Global Treasurer recalls that it is the head of the Treasury Department who advises the president in selecting the Fed chairman;

Bessent himself said in a interview with CNBC on June 27, in response to a question about whether he was considering taking over as Fed chief, «I'll do whatever the president wants me to do. But I think I have the best job in Washington right now.»  

A current member of the Fed's Board of Governors. Another candidate whose name is consistently mentioned in lists of Fed chair nominees in media outlets such as CNN, Yahoo Finance, WSJ, New York Times.

Waller was nominated to run the Fed by Trump. He is an active proponent of the idea that interest rates should be cut as soon as possible. «Why would we wait for a real collapse to start lowering rates? So I fully support the idea that it might be worth thinking about lowering the key rate as soon as the next meeting. We don't want to wait for the labor market to collapse before we start easing policy,» he stated in a June 20 interview with CNBC. 

The Hill wrote that Waller generally shared Powell's stance on interest rates, but was far less concerned about the possible inflationary effect of U.S.-imposed trade duties. That said, even before Trump's return to the White House, he opposed politicians interfering in the Fed's operations, as Bloomberg recalls. «If the president wants to complain, that's his right, just like any other citizen,» Waller told the agency. - That doesn't mean I'm obligated to listen to him or tweak policy to suit his views. But he's entitled to any damn opinion he wants.» 

Bloomberg wrote that during his tenure at the Fed, he became one of the most influential members of the Federal Open Market Committee, which makes rate decisions. His straightforward style, in sharp contrast to the typical Washington uncertainty of «economists with two points of view,» is valued on Wall Street for its clarity. «He can speak to both financial markets and economists - in a way that few people can,» Michael Gaypen, Morgan Stanley's chief U.S. economist, said of him. In addition, Waller's appeal, especially to Republicans, is that he is not a «Washington insider» and did not hold public office before joining the U.S. central bank;

But in Trump's eyes, Waller has one serious flaw, writes Yahoo Finance. The publication, citing Trump adviser Stephen Moore, reports that the president did not like the fact that at the last Fed meeting Waller voted in favor of keeping current rates. 

The head of the U.S. National Economic Council is cited by Yahoo Finance, WSJ, New York Times and other reputable media outlets as a candidate for Fed chair. 

Hassett led the Council of Economic Advisers during President Trump's first term. Now he designs and models Trump's tariff and domestic policies, including the extension of key tax breaks. 

But Hassett's main ability, notes The Hill, is to promote the benefits of the president's agenda precisely when both the markets and the country at large doubt it. Hassett has little Wall Street experience like some of the other contenders, but he is respected in financial circles and has an established reputation as someone loyal to the president, says The New York Times. 

He has also been outspoken in his support for easing monetary policy. In an interview with CNBC on June 23, he said, «There's absolutely no reason why the Fed shouldn't cut rates immediately.» And he added that if inflation remains moderate for another month, «they're going to have to recognize that they have the rate too high.» 

But there may be a sticking point with Hassett: according to the WSJ, he has said he is not interested in the Fed chief position. 

There is no consensus in the U.S. media on this candidate: Yahoo Finance, New York Times and New York Post name him on a list of potential candidates, but The Hill, for example, no longer does.

Malpass has extensive professional experience: during his first term, Trump nominated him for president of the World Bank, a position he held from 2019 to 2023. From 2017-2019, he served as U.S. Treasury Undersecretary of the Treasury for International Affairs. Before that, he was chief economist at Bear Stearns Bank, which collapsed during the financial crisis in 2008. He also held important economic positions under Presidents Ronald Reagan and George H.W. Bush Sr. 

In a mid-June column for the WSJ, he wrote, «Many signs suggest rates should be lower, but the Fed has chosen to keep them flat because of its growth-constrained economic models.» Such models suggest that growing too fast can cause the economy to overheat and cause inflation.

It's possible that after this column, Malpass's name started to appear on candidate lists. However, as the Wall Street Journal confirms, he doesn't have President Trump's endorsement. And one of the reasons seems rather unorthodox - the president doubts that the man would look good on TV. The Wall Street Journal asserts;

Apparently, the factor of appearance when choosing the head of the U.S. central bank for President Trump is not the least important. WSJ writes that when he was considering Worsh for the position of Fed chairman eight years ago, he often talked about his beautiful hair and appearance. But after he made his choice in favor of the gray-haired Powell, he told people in his inner circle that he thought Warsh (he was 47 at the time) looked too young for the role.

She's vice chair of the Fed and a member of the regulator's Board of Governors. She is the only woman in this unannounced race. Bowman is mentioned as a possible successor to Powell by The Hill and The Banker, Scotsman Guide is also among them - the publication calls her a «dark horse.» 

The Hill briefly recounts her professional credentials. Bowman was nominated by Trump to the Fed's Board of Governors back in 2018. Prior to joining the Fed, she served as a bank supervisor for the state of Kansas and was a vice president at Farmers and Drovers Bank. At the beginning of her tenure at the Fed, Bowman kept a low-key demeanor and didn't attract much attention. In 2025, she was promoted: Trump nominated her to be vice chair for bank supervision. This role makes her responsible for regulatory oversight of all U.S. banks, including the largest and most influential.

In June, she openly advocated for lower rates. «It is time to think about adjusting the key interest rate, taking into account the future outlook,» she said.

If she is nominated and confirmed as Fed chair, she will become the second woman in history to hold the position. The first was Janet Yellen;

This article was AI-translated and verified by a human editor