U.S. President Donald Trump has stated that he will not appoint anyone to lead the Federal Reserve who does not support cutting interest rates. This announcement is one of the most direct declarations regarding the criteria for candidates for the central bank chief position, aligning with Trump’s push for significant rate reductions to stimulate the economy. “If I think somebody’s going to keep the rates where they are, I’m not going to put them in,” Trump said, emphasizing his preference for individuals who advocate for lower rates.
Historically, presidents have criticized the Fed for maintaining high interest rates, but Trump’s approach is unique in explicitly demanding that his nominees adhere to his expectations. He believes the current Fed benchmark rate of 4.25% to 4.50% should be reduced to 1%. His dissatisfaction with Fed Chair Jerome Powell has been vocal and persistent, referring to Powell’s performance as subpar and suggesting he should resign.
Following a phase where rates were raised aggressively to combat significant inflation, the Fed did lower rates slightly but has not made further reductions since Trump took office again. Fed officials express caution, citing concerns that Trump’s tariff policies could lead to renewed inflation, leading them to adopt a wait-and-see approach. As Powell’s term as chair is set to expire in May 2026, Trump has begun considering potential replacements and stated he has a few candidates in mind.
While nominations for Fed leadership positions typically occur a few months before a vacancy arises, an early nomination may serve to weaken Powell’s standing by introducing a “shadow chair” favorable to Trump’s policy preferences. However, Treasury Secretary Scott Bessent downplayed this idea, emphasizing that only one Fed seat is expected to become available soon. Among potential nominees are White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh, and current Governor Christopher Waller, the latter of whom expressed openness to interest rate cuts sooner rather than later.