Donald Trump is narrowing down his short list of possible successors to Federal Reserve Chairman Jerome Powell, as he resists the president’s very public calls to cut interest rates.
The top contenders include two Kevins, a top Cabinet secretary, and two members of the Fed’s board of governors, according to senior White House officials and veteran Republican strategists with close ties to the White House.
Trump originally nominated Powell to serve as Fed chairman in 2018, and former President Joe Biden nominated him to a second four-year term in 2022. However, Trump has floated removing Powell from his post early in recent weeks and is reportedly considering announcing a “shadow chair” to put increased pressure on Powell.
“ANYBODY BUT ‘TOO LATE,’” Trump posted Wednesday morning on Truth Social.
Still, experts have expressed concerns that Trump’s open politicization of the battle over interest rates could undermine the footing of whoever the president’s selection turns out to be and the financial health of the United States in the eyes of investors and the global financial community.
“Naturally, this is an idea that leaves many investors feeling uneasy,” Dario Perkins, a senior European economist at TS Lombard, wrote in a Tuesday memorandum, according to CNBC. “Suddenly all the talk is of the Fed ‘losing independence’ and of there being a new era of ‘fiscal dominance’ — not helped by the fact that Trump is explicitly linking his demand for lower rates to reducing debt-servicing costs.”
Furthermore, Powell himself could throw Trump a wrinkle at the end of his term as chairman, as the law requires that position to be filled by a sitting member of the Fed’s Board of Governors. Most outgoing chairs elect to step down from the board once their chairmanship expires, but Powell’s term as a board governor will not expire until 2028, two years after his chairmanship runs its course. Should he choose not to retire from the board, Trump would be limited to picking the next chairman from a group of people who have consistently voted against his calls to cut rates.
White House spokesman Kush Desai said in a statement that Trump “has been clear about the need for the Federal Reserve’s monetary policy to complement the Administration’s pro-growth agenda” and that the president “will continue to nominate the most qualified individuals who can best serve the American people.”
Here are the top contenders to be Trump’s next pick to chair the Federal Reserve.
The two Kevins
Two top picks to succeed Powell bear the same first name: National Economic Council director Kevin Hassett and former Fed governor Kevin Warsh.
Hassett, who was the chairman of the Council of Economic Advisers during Trump’s first term, has emerged as a top fiscal policy voice within the second Trump administration. White House officials frequently use Hassett’s distinctly cheerful disposition on television, where he touts positive economic indicators and spins less favorable economic headlines on the president’s behalf.
Warsh, when it comes to Trump, has always been a bridesmaid but never the bride. His tenure as a Fed governor during the Great Recession was largely applauded by fiscal hawks, including former Trump economic adviser Larry Kudlow, but he has already lost out on two Trump nomination-stakes: first, to Powell for the 2018 Fed chair position, and again last year to Trump’s pick for Treasury secretary, Scott Bessent.
Both Kevins have lambasted Powell in recent weeks, arguing that his resistance to cutting rates until the president’s tariff agenda comes into greater focus lacks merit.
The secretary
Speaking of Bessent, the Treasury secretary has catapulted himself into the upper echelon of Trump’s Cabinet through his handling of the president’s tariff agenda rollout.
Bessent quickly supplanted Commerce Secretary Howard Lutnick and White House senior counsel for trade and manufacturing Peter Navarro as the administration’s lead TV talker on tariffs, after a series of announcements led to significant market pain.
Furthermore, Bessent is credited with convincing the president to put a 90-day pause on the implementation of his “Liberation Day” tariffs based on panic in the 10-year Treasury yield. He successfully negotiated a temporary trade deal with China last month, just one of three trade agreements the White House has secured since Trump rolled out his tariff plan.
And just like Hassett and Warsh, Bessent has stepped up his own criticism of Powell over the rate debate in recent weeks.
“I guess this tariff derangement syndrome happens even over at the Fed,” he said during a July interview on Fox News when asked about why, despite significantly lower inflation than last year, the Fed continues to maintain current interest rates.
The dark horses
There are two Fed board members who, though they have not yet voted to cut rates, are publicly suggesting that a cut could come as soon as this month.
Trump nominated both Fed governor Christopher Waller and Fed vice chairwoman of supervision Michelle Bowman to their posts during his first term.
Neither Bowman nor Waller has the national name recognition of the other aforementioned candidates, but they would stand to benefit the most should Powell choose not to resign from the board once his chairmanship ends next year.
Bowman would be just the second Fed chairwoman, with the first being Powell’s predecessor, Janet Yellen.
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Waller, meanwhile, has begun claiming that economic forecasters appear to be wrong about the inflationary impacts of the president’s tariffs.
“We’ve been on pause for six months to wait and see, and so far, the data has been fine,” he said during an interview with CNBC last week. “I don’t think we need to wait much longer, because even if the tariffs come in later, the impacts are still the same. It should be a one-off level effect and not cause persistent inflation.”