Early Intervention in Decision-Making! Trump to “Appoint” by Year-End—The “New Fed Chair” Is Likely to Participate in Interest Rate Decisions in March and April Next Year

U.S. President Trump is accelerating the selection process for the next Federal Reserve Chair, planning to finalize the candidate by the end of this year. This timeline, which far exceeds the norm, may allow the White House to influence monetary policy ahead of time.

According to Trump’s statement on Monday, he may announce his pick to succeed Fed Chair Powell by the end of the year. Powell’s term expires in May next year, and Trump is currently choosing from five final candidates. U.S. Treasury Secretary Besant plans to conduct round two interviews with the five finalists next month, after which he will submit a shortlist to the president for the final decision.

The five candidates include current Fed Governors Christopher Waller and Michelle Bowman, White House National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh, and BlackRock executive Rick Rieder. Among them, Hassett and Warsh are widely regarded as frontrunners.

Wall Street Journal reporter Nick Timiraos, known as the "New Fed Wire," analyzed that Trump’s chosen Fed Chair is likely to fill the seat currently held by Fed Governor Stephen Miran. Miran’s term ends in January next year, but he can stay on until the Senate confirms his successor. This would allow Trump, before the new Chair’s term officially begins in mid-May, to arrange for the future Fed Chair to participate in the rate-setting meetings in March and April, thereby letting the new Chair influence monetary policy direction even before officially taking office.

The Fed cut rates by 25 basis points in September, when Miran voted against it, favoring a 50 basis point cut. The market widely expects the Fed to cut rates again by 25 basis points at the two-day meeting ending this Wednesday.

Five Candidates Emerge

Treasury Secretary Besant confirmed to the media on Monday that the final five-person candidate list has been set. It includes two current Fed Governors—Christopher Waller and Michelle Bowman, who also serves as Vice Chair for Bank Supervision, both originally nominated by Trump.

Of the other three candidates, two are widely considered frontrunners: White House National Economic Council Director Kevin Hassett and former Fed Governor Kevin Warsh, who was nominated by former President George W. Bush.

Timiraos mentioned in his report that these two candidates have established the closest relationships with Trump, which is seen by outsiders as the key factor to winning the nomination. The fifth on the list is BlackRock executive Rick Rieder, who manages the company’s vast bond business and left a strong impression during his first meeting with Besant this summer.

Timiraos said that although Secretary Besant is leading the selection process, Trump reiterated on Monday that Besant himself is not a candidate. However, people who have spoken with Besant say that if Trump is dissatisfied with other options, Besant could still become the final pick.

Pros and Cons of an Early Appointment

Historically, the White House usually announces the new Fed Chair three to four months before the current Chair’s term ends. An early announcement allows the incoming Chair to influence investor expectations for the rate path.

Timiraos points out that Trump’s chosen Fed Chair is likely to fill the seat currently occupied by Miran. Miran’s term ends next January, but he can stay until the Senate confirms his successor. This will allow Trump to give the future Fed Chair voting power at the March and April rate-setting meetings, ahead of the new Chair’s official term beginning in mid-May.

This arrangement means the new Chair could begin participating in monetary policy decisions two months before officially taking over, providing an institutional channel for early involvement in policy direction.

On the other hand, announcing too early could also have negative consequences. Timiraos says this might put Powell’s successor in an awkward position—either publicly challenge future colleagues’ decisions or defend the Fed’s actions, risking Trump’s displeasure. While the Chair leads and influences rate decisions, these must be approved by the broader committee.

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