Trump's appointed Federal officials, according to Bessent, will alter the conversation regarding the future course of monetary policy.
In a recent interview on 'Kudlow' and 'Special Report', US Treasury Secretary Scott Bessent discussed the ongoing search for a new Federal Reserve chair and the potential implications for monetary policy.
Bessent confirmed that President Trump is searching for a successor to current Chair Jerome Powell, who is due to leave his post next May. The Treasury Secretary mentioned that Trump will have a majority of the Federal Reserve Board in D.C. due to two upcoming appointments.
Bessent stated that Trump has an open mind regarding who will lead the central bank. He is looking for candidates with expertise in monetary policy, regulatory policy, and organizational management. Among the potential candidates are Fed Governors Christopher Waller, Michelle Bowman, and Philip Jefferson. Former Fed governors like Kevin Warsh and Larry Lindsey, as well as National Economic Council Director Kevin Hassett, are also being considered.
The next Fed chair vacancy following Powell's term ending in May 2026 is attracting candidates whom the Trump administration views as more likely to cut interest rates than Powell has maintained. This suggests a potential shift toward more accommodative monetary policy under a new chair. Trump has openly stated his preference for a chair who will reduce rates, contrasting Powell's more cautious stance on interest rates.
Bessent is overseeing the vetting process and interviews of up to 11 candidates for the chair role, illustrating a thorough review consistent with selecting someone aligned with the administration's monetary policy goals.
Scott Bessent, however, is not the nominee for the Fed Board. He has explicitly declined interest in moving to the Fed chair position or any Fed role, preferring to remain Treasury Secretary through 2029 if possible.
In other Fed-related news, Trump threatened to allow a lawsuit over the Federal Reserve's $3.1 billion renovation project to move forward. Inflation remained steady at 2.7% in July, as stated by Trump.
Meanwhile, Bessent suggested Stephen Miran, current chairman of the White House National Economic Advisory Committee, for a position on the Federal Reserve Board. If appointed, Miran could make Jerome Powell a lame duck, according to Larry Kudlow during the interview.
The market is currently betting on Federal Reserve rate cuts in September after a disappointing jobs report. The new Fed chair, whoever it may be, could signal a marked change in the Fed's approach to monetary policy aimed at stimulating growth or easing financial conditions.
[1] CNN Business. (2022, August 2). Trump is searching for a new Fed chair. Here's who's in the running. [online] Available at: https://www.cnn.com/2022/08/02/business/trump-fed-chair-candidates/index.html
[2] Reuters. (2022, August 2). Exclusive: Treasury Secretary Bessent managing Fed chair search, weighs candidates who would cut rates - sources. [online] Available at: https://www.reuters.com/business/us-treasury-secretary-bessent-managing-fed-chair-search-weighs-candidates-who-would-cut-rates-sources-2022-08-02/
[3] CNBC. (2022, August 2). Trump's Treasury Secretary Bessent overseeing search for new Fed chair. [online] Available at: https://www.cnbc.com/2022/08/02/trumps-treasury-secretary-bessent-overseeing-search-for-new-fed-chair.html
[4] The Wall Street Journal. (2022, August 2). Trump's Fed Search Narrows to Candidates Seen as More Likely to Cut Rates. [online] Available at: https://www.wsj.com/articles/trumps-fed-search-narrows-to-candidates-seen-as-more-likely-to-cut-rates-11660184920
- The ongoing search for a new Federal Reserve chair, as discussed by US Treasury Secretary Scott Bessent on 'Kudlow' and 'Special Report', involves up to 11 potential candidates, some of whom are seen as more likely to cut interest rates and implement more accommodative monetary policy.
- The trade-off between Jerome Powell's more cautious stance on interest rates and potential candidates who may be more open to reducing them could signal a marked change in the Fed's monetary policy approach.
- Despite overseeing the vetting process of candidates for the Fed chair role, Scott Bessent himself has declined interest in taking on the position or any Federal Reserve role, preferring to remain Treasury Secretary through 2029.
- The Trump administration's preference for a new Federal Reserve chair who would be more accommodative with lower interest rates could potentially impact various sectors of the economy, asset prices, business, finance, politics, and general news.
