• Treasury Secretary Scott Bessent calls for Federal Reserve flexibility on interest rates to bolster investment, amid President Trump's imminent selection of a new chair to replace Jerome Powell.
  • Trump's final interview with BlackRock (BLK) executive Rick Rieder precedes an announcement expected by late January, possibly around his Davos trip, with frontrunners including Kevin Hassett, Kevin Warsh, and Christopher Waller.
  • The transition tests Fed independence, with Powell defending it in a recent statement, while regional Fed presidents debate 2026 rate cuts amid persistent inflation concerns.

Treasury Secretary Scott Bessent expressed hope that the Federal Reserve will maintain an "open mind" on interest rate policies to support investment, a stance that comes as President Trump prepares to choose a new chair to succeed Jerome Powell, whose term ends in May 2026. Speaking at the Economic Club of Minnesota on January 8, 2026, Bessent indicated that Trump has one final interview—with BlackRock executive Rick Rieder—before announcing the pick by late January, possibly coinciding with Trump's Davos trip.

Efforts to align the Fed with Trump's economic agenda have hit a snag, as Powell defended the central bank's independence in a January 11 statement, echoing concerns from predecessors like Ben Bernanke and Janet Yellen. Without a deal on a chair who balances Trump's growth priorities with inflation control, the administration risks politicizing rate decisions, according to people familiar with the matter. Bessent, appointed effective January 27, 2025, is driving this push, referencing Alan Greenspan's 1990s restraint during the tech boom as a model for patience amid current debates.

Trump's shortlist, shaped by Bessent, includes frontrunners such as White House aide Kevin Hassett, former Fed Governor Kevin Warsh, and current Fed Governor Christopher Waller, with Rieder also in contention. Powell may remain as a board governor until 2028, potentially influencing the new chair, but Trump aims to appoint up to three new board members, including replacements for Stephen Miran and Lisa Cook amid investigations. This transition raises stakes for consumers and markets, as a Trump-aligned chair could lower borrowing costs for mortgages and car loans, easing affordability amid high living costs, but experts like David Wessel warn of navigation challenges between loyalty and economic needs.

In the background, regional Fed presidents are split on 2026 rate cuts: Cleveland Fed's Beth Hammack and Dallas Fed's Lorie Logan voice inflation concerns, while others like Philadelphia Fed's Anna Paulson see cuts later in the year. Bessent's broader financial deregulation efforts, including reduced debt reliance rules and AI adoption in banking, align with Trump's tax cuts and deregulation for 2026 prosperity, shifting the Financial Stability Oversight Council toward growth over prophylactic policies. Attempts to reach the White House for comment on the timing were unsuccessful, but sources suggest an announcement could come as early as next week.

Correction: An earlier version misstated the date of Bessent's speech; it occurred on January 8, 2026, not January 7.