The candidate for Federal Reserve chairman keeps changing; is Bessent still Trump's top choice?

Bank of America Securities’ report on January 21 (analyst Aditya Bhave et al.) points out that the selection process for the Federal Reserve Chair has entered a key stage. The report argues that while the market generally focuses on popular candidates such as BlackRock executive Rieder and Fed governor Waller, **Treasury Secretary Besant may actually be the “hidden candidate” who can simultaneously meet three core criteria.** The report states that the President is seeking a candidate who can satisfy three key conditions simultaneously: **1) highly aligned with his policy preferences; 2) has a suitable public image for the role; 3) can be confirmed by the Senate.** Bank of America believes none of the public candidates fully meets all the criteria at present, but Treasury Secretary Besant is likely to qualify. **With the screening process lengthening, the market should pay more attention to the possibility of Besant’s appointment.** [Trump said this Wednesday at the World Economic Forum in Davos](https://wallstreetcn.com/articles/3763864) that the list of candidates for Fed chair has been narrowed “maybe to only one person,” though he refused to disclose the specific name. The US President stated that **he hopes the chosen Fed Chair will be similar to former Chair Alan Greenspan, and indicated that BlackRock executive Rieder and former Fed governor Warsh are both good choices.** The current situation shows that, as hot candidates Hassett and Warsh each reveal their weaknesses, market attention has shifted to Rieder at BlackRock and Fed governor Waller. Betting market data show Rieder has risen to the second most popular candidate with a 25% support rate. BofA analysis finds that, as the sitting Treasury Secretary, Besant maintains policy coordination space, enjoys Congressional communication channels, and may better balance technical independence with political requirements. The report also reminds that **there is no urgent timeline for this personnel decision. The Trump team may continue to observe, waiting until just before the first chair meeting in June to finalize the choice, ensuring the new chair can lead the subsequent rate-cutting cycle.** The gap between current market expectations and political realities is becoming a key variable affecting the direction of monetary policy. ## The Two Kevins Each Have Fatal Shortcomings National Economic Council Director Kevin Hassett has long been viewed as a top candidate due to his loyalty to Trump, but investors doubt his ability to uphold Fed independence and continue anti-inflation policies. Especially after this month's White House pressured current chair Powell through the Justice Department, market concerns over Hassett have intensified. **Trump himself has recently implied in public that he more likely wants Hassett to stay in his current role, causing the betting markets to sharply lower his odds of winning.** **Kevin Warsh, currently leading the betting markets, also fails to fully meet Trump’s needs.** Although recently he has actively courted the White House through the media, Warsh fundamentally holds traditional hawkish views, consistently criticizing quantitative easing and standing in opposition to Trump’s desired aggressive interest rate cuts. ## Rieder: The Bond Market “Globalist” Rick Rieder has become the “dark horse” among Fed chair candidates, with his support rate rising quickly. Reportedly, his interview with Trump last Thursday went smoothly, and the market sees him as both professionally credible and politically feasible—not only respected as an insider, but also possibly able to win bipartisan Senate support. In terms of monetary policy, Rieder has recently frequently called for more policy easing. He argues that labor market risks now outweigh inflationary pressures and warns that continued tightening could produce “unexpected distribution effects”: stimulating asset-based consumption among the rich while harming small businesses and young workers. In his December report last year, he wrote: “Current Fed policy tools are overly blunt, and many structural problems should really be solved through fiscal channels.” **However, Rieder’s candidacy still has obvious non-traditional elements: he is the only top candidate who has never worked within the Fed system, does not have a PhD in economics, and his most relevant monetary policy experience comes from serving on the New York Fed’s Market Advisory Committee. Politically, his ties with BlackRock—the world’s largest asset manager—may trigger resistance from Trump’s MAGA faction against ‘globalist financial institutions’.** ## Waller: The Fed “Institutionalist’s” Unexpected Advantage Since becoming a Fed governor in 2020, Christopher Waller has consistently shown respect for central bank tradition. He has demonstrated keen policy judgment in managing inflation—for example, in 2022, he accurately outlined the path to suppress inflation by raising rates while avoiding recession, and more recently, he has helped prepare the way for the rate-cutting cycle through forward-looking policy communication, always focusing on labor market stability. Waller’s policy preferences dovetail with the White House, but are built on a rigorous analytical framework, giving him greater credibility in pursuing both anti-inflation goals and lowering long-term capital costs. However, as a firm defender of current monetary policy frameworks, his commitment to central bank independence may conflict with Trump’s intention to reshape the Fed. If he ultimately fails to secure the nomination, **the main obstacle may be his clear unwillingness to become a direct executor of political will within the central bank.** Risk Warning and Disclaimer The market carries risks, and investments should be made cautiously. This article does not constitute personalized investment advice, nor does it take into account an individual user’s special investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article suit their specific circumstances. If investing accordingly, responsibility lies with the individual.