After a series of grueling two-hour interviews, Treasury Secretary Scott Bessent has narrowed his list of 11 candidates to five, who could be named to the Fed (though not necessarily named) by January.
Treasury officials said the remaining candidates include two current Fed officials, Vice Chairwoman Michelle Bowman and Governor Christopher Waller, as well as National Economic Council Director Kevin Hassett, former Fed President Kevin Warsh and BlackRock fixed income chief executive officer Rick Rieder.
The Treasury Department plans to interview all five candidates again in the coming weeks and months. The press conference will be led by Bessent and will include two senior Treasury Department officials and two White House officials.
The interview process may not end until after Thanksgiving, officials said, as Mr. Bessent is focused on the World Bank/IMF meeting in Washington next week, followed by an extended trip to Asia with President Donald Trump.
The secretary will then send a smaller list to President Trump, who will make the final decision. However, it is likely that this person will be named first to the Fed Board and then to the Fed Chairman.
The reason for this is that Federal Reserve Chairman Jerome Powell, who is retiring at the end of his term in May, has only two years left in his role. The term of office for former Fed Director Adriana Kugler, currently held by Stephen Millan, expires in January, and a new Fed chair can be appointed to fill the seat that expires in 2014.
But officials said no strategy had been decided upon and other possibilities were possible.
The president has already named Warsh, Hassett and Waller as finalists, leaving Reeder and Bowman as the only new nominees to the White House.
Rick Rieder, Chief Investment Officer of Global Fixed Income at BlackRock, speaks at the Delivering Alpha Conference in New York City on September 28, 2023.
Adam Jeffrey | CNBC
Compared to previous administrations, the Trump administration has been more open in its selection process for the next Fed chair, announcing candidates as the list expands and now shrinks.
At the same time, the president’s own administration has been highly critical of Fed policy, repeatedly calling for deep cuts in interest rates. The president has threatened to fire Powell and actually fired Fed Board member Lisa Cook on suspicion of mortgage fraud, an accusation that Powell denies.
Cook’s firing has been blocked by a lower court, and the case is scheduled to be heard by the Supreme Court in January. The attempt to replace Mr. Cook raised concerns about the administration’s commitment to the Fed’s independence, sparked interest in appointing a new chairman, and the decision will be closely monitored.
BlackRock’s leader is impressive
Treasury officials also provided the first insight into Mr. Bessent’s thinking about the criteria for determining who is chosen for the job.
Mr. Bessent is said to be open to new ideas about how the Fed and monetary policy should be run and is looking for someone with experience in economics, monetary policy, banking regulation and management.
He recently penned an essay harshly criticizing the Fed and calling for an overhaul of the central bank’s policies, structure, and mission.
Among his criticisms was that the Fed has grown too large and is experiencing mission creep. This suggests that he favors candidates willing to reduce the size of the Fed and reduce the use of some tools, particularly quantitative easing.
Officials said there were no strong candidates, but acknowledged recent reports that Mr. Rieder had impressed Mr. Bessent.
Mr. Reeder, a frequent guest on CNBC, has long been a well-known figure on Wall Street. His analysis of the bond market and the Federal Reserve is widely read. He also manages a large division at BlackRock. Although not definitive, officials suggested it could be a plus that Mr. Rieder is the only one of the five remaining candidates who has never worked at the Fed.
