The race to succeed Jerome Powell as Federal Reserve chair is gathering pace, with Treasury Secretary Scott Bessent now spearheading the search and quietly reshaping the conversation around the central bank’s future.
According to sources familiar with the process, Bessent has recently held private meetings with several names on President Donald Trump’s shortlist, including former Fed officials Lawrence Lindsey and Kevin Warsh—both of whom previously served as governors—as well as James Bullard, the former president of the St. Louis Fed.
Bessent is expected to expand the field further once the Federal Open Market Committee’s blackout period ends next week, allowing him to speak with sitting Fed officials. For now, the working list includes not only the candidates Trump has already floated, such as National Economic Council Director Kevin Hassett and Fed Governor Christopher Waller, but also a broader pool of about a dozen economists and market strategists.
At the same time, Bessent is advancing a reform vision that could redefine the central bank’s role. Sources say he is pushing for a gradual and market-friendly reduction of the Fed’s $6 trillion balance sheet—its vast holdings of Treasurys and mortgage-backed securities—while also urging a slimmer economic footprint for the institution.
His ideas echo an opinion piece he published in The Wall Street Journal last week, in which he criticized what he called the Fed’s “gain of function” overreach. “The Fed must change course,” he wrote, arguing that the central bank’s expanding toolkit has become “too complex to manage, with uncertain theoretical underpinnings.”
The timing is critical. Powell’s term as chair ends in May 2026, though he could continue as a governor. Meanwhile, the Senate will soon vote on Trump nominee Stephen Miran for a vacant Board of Governors seat, while controversy lingers over the president’s unsuccessful attempt to oust Governor Lisa Cook.
Against this backdrop, markets widely expect the Fed to deliver its first rate cut since late 2024 when the FOMC meets next week—a move that underscores how closely the White House is watching the central bank.
Bessent’s influence in both shaping the shortlist and steering the debate over the Fed’s mission ensures that this search is not just about who leads the institution next, but also about what kind of Federal Reserve America will have in the coming decade.
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