US Treasury Secretary Scott Bessent on Monday named five candidates who may replace Jerome Powell as chair of the Federal Reserve next year, reported news agency AP.
Bessent mentioned that he will conduct the second round of interviews in the coming weeks and provide US President Donald Trump with a “good state” of candidates, likely after Thanksgiving. Trump is expected to select the next Federal Reserve chair by the end of 2025.
The five candidates who are currently in the race to replace Jerome Powell are Federal Reserve governors Christopher Waller and Michelle Bowman, former Fed governor Kevin Warsh, White House economic adviser Kevin Hassett, and Rick Rieder, senior managing director at asset manager BlackRock.
These candidates indicate that significant changes at the Federal Reserve are likely next year, regardless of who is chosen. Bessent, currently heading the search for Powell’s successor, recently issued detailed criticisms of the Fed and some of its policies from the 2008-2009 Great Financial Crisis through the pandemic.
Here’s a brief look at the candidates named by Bessent —
Hassett is currently the chair of the White House’s National Economic Council. He previously served as a key adviser to Trump during his first term and frequently defended the administration’s policies on television.
Warsh served as an economic advisor during the George Bush administration and was appointed to the Fed’s governing board in 2006 at the age of 35, the youngest Fed governor in history. He left the board in 2011. Currently, Warsh is a fellow at the Hoover Institution and lectures at Stanford Graduate School of Business.
In 2020, Trump appointed Waller to the Fed. Waller pushed for Fed rate cuts in July and dissented at that meeting in favour of a quarter-point cut when the Fed decided to leave its key rate unchanged.
Along with 10 other Fed officials, he also voted to cut interest rates in the September meeting.
Michelle Bowman is the Fed’s vice chair of supervision, the leading banking regulator in the country. Appointed by Trump in 2018, she previously held the role of Kansas’ state bank commissioner. Bowman also dissented earlier in July, supporting a rate cut, and last month voted with her colleagues for a quarter-point reduction.
Rieder has the most experience in financial markets compared to all the other candidates under consideration. He has worked for Wall Street firms since 1987 and joined BlackRock in 2009. He specialises in fixed income and oversees the management of approximately $2.4 trillion in assets.
Bessent has consistently criticised the Fed, particularly for continuing unconventional policies, including purchasing Treasury bonds to lower longer-term interest rates.
“It (Fed) also likely requires an honest, independent, and nonpartisan review of the entire institution and all of its activities,” the report quoted Bessent.
His remarks come at a time when Trump frequently criticises the Fed Chair and pushes for lower interest rates, actions that have challenged the Fed’s independence. Additionally, Trump has made the unusual move of attempting to fire Fed governor Lisa Cook, a Biden appointee, to create another vacancy on the board, the report said.
On Monday, Trump on Monday again attacked Powell, stating that he has cut interest rates slowly.
“We have a person that’s not at all smart right now,” Trump said, indicating to Powell. “He should have been much lower, much sooner.” The Fed is anticipated to cut its key rate again this Wednesday, marking the second rate cut this year.
Trump aims to choose a new chair by the end of this year, possibly due to the complexities around Powell’s position. Powell’s chair term ends next May, but he may stay on the Fed’s board as one of seven governors until January 2028. This could prevent Trump from nominating another governor for several years, the report said.
The current governor, Stephen Miran, was appointed by Trump on 16 September to complete an unexpired term, which is ending on 31 January. Trump could nominate his candidate to replace Powell for that seat and then promote that individual to chair in May after Powell steps down, it added.
(With inputs from agencies.)