WASHINGTON – President Donald Trump has narrowed his list of potential candidates to lead the Federal Reserve to four people, a move that intensifies speculation over the future of U.S. monetary policy and signals a potential departure from the course set by current Chair Jerome Powell.

Speaking to reporters on Tuesday, the president confirmed that Treasury Secretary Scott Bessent is no longer under consideration for the powerful post, stating that Bessent wishes to remain in his current role. The decision to replace Powell, whose term as chair is approaching its end, is one of the most consequential economic appointments of Trump's presidency, with significant implications for inflation, employment, and global financial stability.

While the White House has not released the full shortlist, President Trump mentioned former Federal Reserve Governor Kevin Warsh as a prominent name among the final candidates. The selection process is now expected to accelerate, with an official nomination likely in the coming weeks.

A Narrowed Field and Potential Nominees

The exclusion of Scott Bessent, a key figure in the administration's economic team, streamlines a field of candidates likely to be more aligned with the President's preference for lower interest rates to stimulate economic growth. Bessent's decision to remain at the Treasury Department was described by the president as a mutual agreement.

Kevin Warsh, who served as a Fed governor from 2006 to 2011, has long been viewed as a leading contender. An economist and a distinguished visiting fellow at Stanford University's Hoover Institution, Warsh has at times been critical of the Fed's policy framework, suggesting he may favor significant strategic changes if appointed.

The identities of the other three candidates remain closely guarded. However, analysts speculate the list includes individuals known for their skepticism of the Fed's recent rate-hiking cycles and who may advocate for a more direct link between monetary policy and administration growth targets. This contrasts with the Federal Reserve's traditional independence, a cornerstone of its credibility.

Why the Fed Chair Matters

The Chair of the Federal Reserve is arguably the most powerful economic policymaker in the world. The position oversees the Federal Open Market Committee (FOMC), which sets the federal funds rate—the benchmark that influences borrowing costs for everything from mortgages and car loans to corporate debt.

The Fed operates under a dual mandate from Congress: to achieve maximum employment and maintain stable prices. Navigating this delicate balance requires careful, data-driven decisions that are insulated from short-term political pressures. The chair's public statements can move markets instantly, and their long-term strategy shapes the economic landscape for years.

President Trump has been a vocal critic of Chair Powell, whom he appointed in 2018. During his first term, Trump frequently assailed Powell for raising interest rates, arguing the moves stifled economic potential. The appointment of a new chair is seen as an opportunity for the administration to install a leader more philosophically aligned with its pro-growth agenda.

Potential Policy Shift and Market Reaction

A new chair nominated by Trump would likely represent a significant pivot in monetary policy. Analysts predict a more "dovish" stance, prioritizing lower interest rates and being more tolerant of inflation to boost economic activity and reduce the cost of servicing the national debt.

Financial markets are watching the developments with a mix of anticipation and apprehension. While lower interest rates can boost stock prices in the short term, they also carry the risk of igniting inflation, which the Fed under Powell has worked diligently to control. The uncertainty surrounding the nomination could lead to increased market volatility.

Economists and international partners are also paying close attention. A less independent Federal Reserve could erode confidence in the U.S. dollar and create instability in a global financial system that relies on the Fed's steady hand. The upcoming Senate confirmation hearings for any nominee are expected to be contentious, with senators probing the candidate's commitment to the central bank's independence and its dual mandate.

The final choice will set the tone for the U.S. economy for the next four years, making this one of the most closely watched appointments of the current administration.