With 11 months left in Jerome Powell's term as Chair of the Federal Reserve (Fed), speculation has emerged that President Donald Trump may appoint his successor earlier than expected. This arises from dissatisfaction with the Fed's cautious interest rate cuts, and it is suggested that an announcement could happen as early as this summer.
According to a report by The Wall Street Journal (WSJ) on the 25th (local time), potential candidates for the next Fed chair include ▲ Kevin Warsh, former Fed governor, ▲ Kevin Hassett, Chairperson of the National Economic Council (NEC), ▲ Scott Bessent, Secretary of the Treasury, ▲ David Malpass, former President of the World Bank, and ▲ Christopher Waller, Fed governor.
Earlier, during a press conference at the NATO summit held in The Hague, Trump was asked if he had begun interviewing potential successors for Powell, to which he responded, "I have 3 to 4 people in mind," adding, "Fortunately, Powell will be gone soon. He's terrible."
Among the candidates, Warsh and Hassett are particularly predicted to have a high chance of being nominated. Warsh served as an economic policy advisor in the White House during the George W. Bush administration and has been in contact with Trump earlier this year. Trump also considered Warsh for the position of Secretary of the Treasury prior to his inauguration last November.
During a closed-door meeting held earlier this month in Boston, Warsh stated that "it is likely that Powell's successor could be nominated earlier than usual," and added, "In this case, Powell will fall into a lame duck situation," suggesting his own chances of being nominated.
Typically, the U.S. administration announces the next chair candidate 3 to 6 months before the current Fed chair's term expires. Considering the transition period for the chair change, it is analyzed that announcing a successor in the summer or fall would be quite early.
Bessent is regarded as a person with public appeal and practical sense, particularly for effectively managing Trump's tariff policy. His ability to fulfill the loyalty and policy coordination that Trump desires is considered his biggest competitive advantage. Although he has publicly stated that he is not interested in the Fed chair position, several sources reveal that he has conveyed that he will follow if the President wants.
Malpass, who was nominated by Trump as President of the World Bank during his first administration, recently criticized the Fed's economic model as 'anachronistic' through an op-ed in the WSJ, calling for interest rate cuts. This public criticism is believed to have been highly regarded by Trump. However, some aides reportedly expressed opposition, noting that 'his appearance and impression do not fit well on TV.'
In the past, Trump has disqualified Kevin Warsh from a ministerial position for being 'too young,' so Malpass's external factors may also pose significant obstacles in this instance.
Meanwhile, WSJ analyzes that the key to this early nomination lies in the concept of a 'shadow chair.' This would allow the next chair to influence the market and preemptively adjust monetary policy before the official term begins, aiming for Trump's side to shift the direction of the Powell regime early.
However, this approach carries the risk of friction with current Fed commissioners, market confusion, and political controversies simultaneously. Even Bessent, who proposed this strategy just before last year, has retracted his position after Trump's inauguration.
Additionally, since there is a legal possibility for Powell to remain on as a Fed governor even after his term ends, it may be difficult for the early-nominated candidate to immediately lead monetary policy. Whether market trust and consensus within the Fed can be achieved remains uncertain.
During a congressional hearing held on the 24th, Powell expressed, "I have no interest in the recent political drama at all," stating that he wants to stabilize the economy and control inflation to hand over to his successor in his remaining term.