The Federal Reserve is making headlines as speculation grows over its next chair and potential monetary policy shifts.

President Trump revealed he has interviewed "three to four" candidates to replace current Fed Chair Jerome Powell, with an announcement expected soon. Trump praised Fed Governor Christopher Waller after their Wednesday meeting, calling him "great" and noting his long tenure at the central bank. Waller recently suggested rates could drop 50-100 basis points amid cooling inflation and labor market concerns.

The shortlist has reportedly narrowed to four candidates: Kevin Hassett, Kevin Warsh, Christopher Waller, and BlackRock's Rick Rieder. Notably, Fed Governor Michelle Bowman is no longer under consideration.

Trump emphasized his next Fed pick would believe in "substantially" lower rates, though none of the finalists have explicitly endorsed cuts to Trump's desired 1% level. Current Fed rates stand at 3.5%-3.75%, with even Trump-appointed Governor Stephen Millan opposing maintaining rates this low.

Meanwhile, Fed officials are weighing in on economic data. New York Fed President John Williams noted technical factors may have artificially depressed November's 2.7% CPI reading by about 0.1 percentage points. Chicago Fed President Austan Goolsbee called the inflation report "encouraging" but cautioned against overinterpreting single-month data.

Fed Governor Waller supported gradual rate cuts toward neutral levels but stressed no urgency, stating current policy rates may be 50-100 basis points above neutral if inflation continues slowing through 2026. JPMorgan Chase analysts interpreted Waller's comments as reinforcing a measured easing approach while defending Fed independence ahead of leadership changes.

The selection process continues as markets watch for signals on future monetary policy direction.