Who Will Lead the Fed Next? A High-Stakes Power Play

6 September 2025

Former U.S. Federal Reserve Governor Kevin Warsh speaks during a monetary policy conference at Stanford University’s Hoover Institution in Palo Alto, California, U.S. May 9, 2025. REUTERS/Ann Saphir/File Photo

President Trump has narrowed his choices for the next chair of the Federal Reserve to three finalists: Christopher Waller, Kevin Hassett, and Kevin Warsh. Also briefly considered was Treasury Secretary Scott Bessent, but he declined to be in the running. In press remarks from the White House, Trump confirmed those three remain under serious consideration while acknowledging Bessent’s interest in staying put in his current role.

Trump has made clear that he is frustrated with Jerome Powell’s reluctance to rapidly lower interest rates. He has criticized the current chair for failing to act quickly on borrowing costs, which Trump claims has harmed homeowners by keeping mortgage rates elevated. With a weakening jobs report where August’s figures revealed a slowdown in job growth and a rise in unemployment to a nearly four-year high, the president has doubled down on his demand for a more responsive Federal Reserve leadership.

His shortlist is telling in this context. Kevin Hassett, director of the National Economic Council and former chair of the Council of Economic Advisers, is closely aligned with Trump’s economic strategy, including his tariff policies and aggressive pursuit of rate cuts. Christopher Waller, a sitting Fed governor and former economist at the St. Louis Fed, offers a more traditional academic perspective, known for accurate economic forecasts and a blend of early rate hikes followed by policy easing. Kevin Warsh, a former Fed governor now at Stanford’s Hoover Institution, brings a voice of internal reform and has historically pushed back against excessive Fed interventions, especially during the financial crisis.

The selection carries considerable importance. Markets are watching closely, knowing that leadership changes at the Fed can signal shifts in inflation strategy, interest rates, and the bank’s autonomy. The subdued August jobs report coupled with Trump’s frequent criticism has heightened expectations for a more accommodative Fed approach. Powell himself recently acknowledged downside pressures in labor markets that may justify a cautious adjustment, a nod toward possible rate cuts, albeit more moderate than Trump prefers.

Treasury Secretary Scott Bessent, who led the search, is no stranger to monetary policy debates. He has warned of "policymaking arrogance" within the Fed and pushed for a thorough operational review. Nevertheless, he stepped aside from consideration, asserting he preferred to remain in his current post.

This scenario reflects broader concerns about the Fed’s future direction. Trump’s relentless pressure on Powell, combined with attempts to reshape board composition including naming loyalists and considering the removal of sitting governors has drawn criticism for undermining the bank’s independence. Meanwhile, the job metrics, with slowing growth and rising unemployment, provide political justification for change. Financial analysts highlight the risk of destabilizing monetary policy if the Fed’s governance becomes overly politicized.

Each finalist brings distinct strengths and implications. Waller offers institutional continuity and deep economic expertise; Warsh brings past Fed experience and a reformist bent; Hassett aligns closely with Trump’s aggressive economic agenda. The final decision, expected in the months ahead, will have implications far beyond the Beltway for policy direction, market confidence, and the contours of central bank independence.