Original Title: "Report: U.S. Treasury Secretary Bessent Considered as One of the Candidates for Next Federal Reserve Chair"

Original Author: He Hao, Wall Street Insights

According to reports on Tuesday, current U.S. Treasury Secretary Scott Bessent is being considered as one of the potential candidates for the next Federal Reserve Chair. Some advisers, both within and outside the Trump administration, are advocating for Bessent to take on the role. Bessent has emerged as a strong contender for the position. Last Friday, Trump stated that he would soon appoint the successor to current Fed Chair Jerome Powell. As reported, formal interviews for the next Fed Chair have not yet begun. Powell's term is set to expire in May 2026.

In response to the news, Bessent said: "I have the best job in Washington. The President will decide who is most suitable for the U.S. economy and the American people."

A senior U.S. government official denied the related reports but did not provide specifics. Subsequently, the White House dismissed media reports suggesting Bessent as a potential candidate for the position of the next Fed Chair, calling them false. Bessent is currently leading efforts to implement an economic reform plan, involving significant changes in trade, taxation, and regulation. As the current U.S. Treasury Secretary, Bessent is expected to play a key role in the process of identifying and interviewing the next Fed Chair. It is unclear whether he will recuse himself when the President makes the final decision.

Other Candidates

The media, citing informed sources, reported that other candidates under consideration for the next Fed Chair include former Federal Reserve official Kevin Warsh, who interviewed for the position of Treasury Secretary in the Trump administration last November. Warsh is considered a frontrunner for the Fed Chair role. Other mentioned candidates include Kevin Hassett, director of the White House National Economic Council; Christopher Waller, a Federal Reserve Governor; and David Malpass, former World Bank President.

When asked about Warsh last Friday, Trump remarked, "He has a great reputation."

Tim Adams, President of the Institute of International Finance, noted that Bessent enjoys high levels of trust in the global financial community, making him an obvious choice. Adams also described Bessent as a "dark horse" candidate, while acknowledging that Warsh is also a solid choice.

Former White House Chief Strategist Steve Bannon said, "Bessent has proven himself capable of executing the President's agenda during an extremely turbulent first six months. He is not only a cabinet star but also a safe pick for global capital markets."

Economist and Trump ally Arthur Laffer stated that Besancet is excellent but he already has a job, and monetary policy is not his forte. "I told the President that I think Waller is the most suitable candidate."

The Fed's Independence Becomes a Key Concern

This year, the Federal Reserve, under the leadership of current Chair Jerome Powell, decided to keep interest rates unchanged, citing a need for patience amid the uncertainties caused by Trump’s frequent use of tariff policies. The Fed has expressed concerns that these tariffs could potentially dampen economic growth and raise inflation.

Trump first nominated Powell as the Federal Reserve Chair in 2017. However, he has often criticized Powell for not cutting interest rates promptly and repeatedly pressured him for rate cuts. Trump has frequently stated that he should have a say in interest rate decisions, raising concerns over whether a new Fed chair would be overly compliant to presidential directives.

Analysts suggest that the next Fed Chair must demonstrate to the market that the Federal Reserve remains independent and free from political interference. International Institute of Finance (IIF) President Adams believes that whether it's Besancet or Waller, the financial community would lean towards trusting that they would uphold the Fed’s independence.

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