WASHINGTON, D.C. — In a move with deep implications for U.S. monetary policy and global financial markets, President Donald J. Trump announced on Tuesday that he has officially ruled out Treasury Secretary Scott Bessent as a contender for the next Federal Reserve chair, narrowing the shortlist to four candidates. Among the top names are Trump economic adviser Kevin Hassett, former Fed Governor Kevin Warsh, and two other unnamed individuals—one widely believed to be current Fed Governor Christopher Waller.
The decision coincides with the early resignation of Fed Governor Adriana Kugler, a Biden appointee, which Trump called a “pleasant surprise.” Kugler’s exit provides Trump an immediate opening to install a political and economic ally onto the Fed’s Board of Governors, an opportunity he appears eager to seize ahead of a critical rate decision by the central bank next month.
Kugler announced she would step down by Friday, cutting her term short to return to academia at Georgetown University. Her departure gives Trump not only an opportunity to shape the near-term direction of Fed policy but also the chance to potentially elevate her short-term replacement into the top job at the Federal Reserve once Chair Jerome Powell’s term ends in May 2026.
In an interview with CNBC earlier Tuesday, Trump hinted at using the vacancy to install someone who could both serve the remainder of Kugler’s term and become Powell’s successor—effectively giving his pick months of influence over monetary policy before facing full Senate confirmation for the 14-year term.
“A lot of people say, when you do that, why don’t you just pick the person who is going to head up the Fed?” Trump said. “That’s a possibility too.”
The exclusion of Scott Bessent, the current Treasury Secretary and a prominent market figure, narrows Trump’s Fed chair options. Trump said Bessent preferred to remain at Treasury, removing himself from contention.
Trump now appears focused on a smaller circle of candidates with strong ideological alignment and past affiliations with his administration. Kevin Hassett, former chairman of the Council of Economic Advisers, and Kevin Warsh, a former Fed governor and consistent Fed critic, are now considered leading contenders.
Economists see this narrowing as an attempt to cement Trump’s influence over the Fed and steer it toward a more dovish monetary stance—particularly as he continues to criticize Chair Powell for not cutting interest rates since Trump returned to office in January.
Investors are already anticipating a rate cut at the next Federal Open Market Committee (FOMC) meeting on September 17, especially after last week’s disappointing July jobs report. According to the CME FedWatch Tool, the probability of a 25-basis-point cut has surged to 90.4%, up dramatically from 63.3% just a week ago.
The July nonfarm payroll report, released last Friday, showed only 73,000 jobs added, far below the 110,000 estimated by economists surveyed by LSEG. In addition, downward revisions of 258,000 jobs across May and June further confirmed a weakening labor market.
While Powell has remained cautious, citing inflation still above the 2% target, market participants now view a rate cut as all but inevitable—especially with the political pressure intensifying from the White House.
Trump’s dismissal of Bureau of Labor Statistics (BLS) Commissioner Erika McEntarfer—reportedly over dissatisfaction with job numbers—has added fuel to concerns about politicization of U.S. data institutions. The firing, which came the same day as Kugler’s resignation, has drawn sharp criticism from economists and policy observers who warn of a deterioration in the credibility of official economic data.
Michael Strain of the conservative American Enterprise Institute warned:
“If you appoint somebody perceived to be a lackey as the Fed chair, take the BLS freakout and multiply it by 1,000.”
Indeed, skepticism about Trump’s intentions has only grown with his pattern of clashing with Powell, his handpicked Fed chair during his first term, whom he later turned against for not being more aggressive on rate cuts.
The Federal Reserve has held interest rates steady at 4.25%–4.50% through five meetings this year, despite growing evidence of a cooling economy. Inflation, measured by the Fed’s preferred Personal Consumption Expenditures (PCE) index, rose to 2.6% in June, with core PCE (excluding food and energy) increasing to 2.8%, casting doubts on how quickly the Fed could pivot to an easing stance.
But the weak jobs data appears to have tipped the scales in favor of a September cut. Fed Governor Christopher Waller, reportedly among the top four Fed chair candidates, dissented in the July policy vote, arguing that the inflation risks from Trump’s tariffs were “modest,” and that rate cuts should begin sooner due to broader economic softening.
By selecting Kugler’s interim replacement now—possibly someone who would later be nominated as chair—Trump gains a chance to “test-drive” his preferred monetary policy approach, influencing Fed decision-making in the run-up to the 2026 election cycle. However, any permanent appointment would require Senate confirmation, a process that could become contentious, especially if Democrats regain control of the chamber.
James Fishback, CEO of Azoria investment firm and former advisor in the Department of Government Efficiency (DOGE), is reportedly among those who have expressed interest in a temporary Fed appointment. While the White House has not confirmed his candidacy, sources indicate materials were requested from Fishback earlier this week.
With Trump once again reshaping America’s most influential economic institution, Wall Street and central bankers worldwide are watching closely. The combination of leadership reshuffling, data skepticism, and intensifying political pressure is turning the usually sober world of monetary policy into high-stakes drama.
Whether the eventual nominee is Hassett, Warsh, Waller—or another surprise pick—Trump appears poised to install a Fed chair more aligned with his aggressive pro-growth, low-interest-rate vision. What that means for inflation, employment, and economic stability remains uncertain.
But one thing is clear: the independence of the Federal Reserve—long seen as a cornerstone of U.S. economic credibility—is facing its most serious test in decades.