• Trump has narrowed his Fed chair shortlist to four candidates, excluding Scott Bessent who prefers to remain at Treasury.
  • The selection could signal a move toward more politically aligned monetary policy, raising concerns about Fed independence.
  • Markets are closely watching for potential impacts on interest rates and inflation control.

Trump's Fed shortlist takes shape

Former President Donald Trump has narrowed his list of potential Federal Reserve chair candidates to four individuals after Treasury official Scott Bessent indicated he would prefer to remain in his current role, according to people familiar with the matter. The development comes just two days after Trump publicly floated Bessent as a possible replacement for current Fed Chair Jerome Powell.

The remaining candidates include White House National Economic Council Director Kevin Hassett and former Fed governor Kevin Warsh, along with two unnamed individuals. The selection process has gained urgency as Powell's term expires in May 2026, with Trump positioning himself as a likely presidential contender.

Independence concerns resurface

Trump's public deliberation over Fed leadership has reignited concerns about central bank independence. During his presidency, Trump frequently criticized Powell for what he viewed as insufficiently accommodative monetary policy, at one point suggesting he had the authority to replace the Fed chair.

"When you have a president openly discussing preferred candidates two years before the term expires, it inevitably raises questions about political influence," said one market strategist who asked not to be named due to client relationships. Bond markets showed little immediate reaction to the news, with 10-year Treasury yields holding steady at 4.32% in afternoon trading.

Policy implications loom large

The final selection could have significant implications for monetary policy direction. Both Warsh and Hassett have previously been considered for Fed roles, with Warsh emerging as a leading candidate during Trump's first term before Powell ultimately secured the position.

Treasury officials declined to comment on Bessent's preferences, though two administration sources confirmed he had expressed a desire to continue his current work on international economic policy. The White House has not formally acknowledged the candidate list, with one spokesperson saying only that "no personnel decisions have been made" regarding future Fed leadership.

Correction: An earlier version of this story misstated the expiration date of Powell's term. It ends in May 2026, not 2024.