Context:

Treasury Secretary Scott Bessent has narrowed the candidates for the Federal Reserve Chair position to five finalists, with an announcement expected by the year's end. The contenders include current Fed Governors Christopher Waller and Michelle Bowman, National Economic Council Director Kevin Hassett, former Governor Kevin Warsh, and BlackRock executive Rick Rieder. While Powell's term extends until May 2026, President Trump is preparing to name a successor, which could shift the balance of the Fed as Trump aims to have four appointees if Powell steps down. The Federal Open Market Committee is also poised to lower interest rates, reflecting ongoing economic conditions and pressures.

Dive Deeper:

• Bessent has been conducting interviews to finalize the candidate slate and anticipates one more round of discussions before presenting the list to Trump post-Thanksgiving.

• Trump has three current appointees on the Fed's Board of Governors: Waller, Bowman, and Stephen Miran, whose term ends in January but is not expected to be renewed.

• The Federal Open Market Committee is scheduled to meet this week to decide on interest rates, with a quarter-point cut almost fully anticipated by the markets, following a similar reduction in September.

• If Powell were to resign, Trump would gain the ability to appoint four members to the seven-member board, significantly influencing Fed policies.

• Governor Lisa Cook remains a target for Trump’s removal efforts but has so far remained on the board despite the President's intentions.