Treasury Secretary Bessent Advances Fed Chair Search with Key Candidate Meetings

Treasury Secretary Bessent Advances Fed Chair Search with Key Candidate Meetings

Treasury Secretary Scott Bessent has taken a leading role in the ongoing search for the next Federal Reserve chair, meeting recently with several top candidates on President Donald Trump’s shortlist, according to a Treasury source speaking to CNBC.

In the past week, Bessent held discussions with former Fed governors Lawrence Lindsey and Kevin Warsh, as well as James Bullard, the former president of the St. Louis Fed. These meetings reflect efforts to broaden the candidate pool beyond those publicly named by the White House, which currently includes Warsh, National Economic Council Director Kevin Hassett, and current Fed Governor Christopher Waller.

Bessent is postponing interviews with sitting Federal Reserve officials until after the Federal Open Market Committee’s blackout period concludes at the end of next week, sources added. Overall, the Treasury is considering a wider group of 11 economists, encompassing former and current central bankers as well as market strategists.

Fed Reform and Balance Sheet Reduction

Alongside the leadership search, Bessent is advocating for reforms aimed at shrinking the Federal Reserve’s substantial bond holdings. The Fed’s balance sheet currently holds approximately $6 trillion in U.S. Treasurys and mortgage-backed securities. The Treasury’s objective is to achieve this reduction gradually and in a manner that avoids market disruption or adverse effects on the broader economy.

Bessent also supports decreasing the Fed’s overall economic footprint, signaling a desire for the central bank to retreat from the expansive interventions it has deployed in recent years.

White House Pressure on Interest Rates

The Federal Reserve remains under intense scrutiny from the White House. President Trump and other administration officials have called for an interest rate cut, a move not seen since December 2024. Market expectations strongly favor the FOMC approving a quarter-point decrease at its upcoming meeting next week.

In a recent Wall Street Journal opinion piece, Bessent criticized the Fed’s current approach, describing its tool kit as overly complex and lacking clear theoretical foundations. He argued that the Fed has exceeded its core mandate focused on low unemployment and stable inflation, urging a course correction.

Upcoming Leadership Changes

Chair Jerome Powell’s term expires in May 2026. While he may remain on the Board of Governors for an additional two years, he is expected to be replaced as chair. Additionally, the Senate is preparing to vote on Stephen Miran’s nomination to fill a Board of Governors vacancy.

The administration has also sought to remove Governor Lisa Cook over mortgage fraud allegations, though legal challenges have so far prevented her ouster.