US President Donald Trump said that supporting an immediate interest rate cut would be a prerequisite for any candidate he chooses to head the Federal Reserve, according to an interview published by Politico on Tuesday.
When asked whether an immediate interest rate cut would be a major test for the new nominee, Trump replied: Yes, adding: Yes… and this guy too… should do it, referring to current Federal Reserve Chairman Jerome Powell, before describing him as not smart and not liking Trump.
Trump’s remarks reveal a direct message to potential candidates for the Federal Reserve chairmanship about the expectations the president would place on them if they were to take over the leadership of the central bank.
Throughout this year, Trump has repeatedly called on the Federal Reserve to cut the benchmark interest rate to below 2 percent, compared to the current level of between 3.75 and 4 percent.
The Federal Reserve is widely expected to cut interest rates by 25 basis points in its anticipated decision on Wednesday.
The competition for the position is between a group of names that are closely followed by investors.
Trump did not answer a question during the Politico interview about whether he had contacted potential candidates for the position.
List of candidates
While US President Donald Trump has a shortlist of five finalists for the position of the next Federal Reserve chairman, he said last week that he believes he knows who he will choose, without specifying a particular person.
Last week, Trump told reporters in the Oval Office regarding who will succeed outgoing Federal Reserve Chairman Jerome Powell, whose term ends in May: “I think I already know my choice. I wish the current president would appoint him immediately, but some people are holding me back.”
Treasury Secretary Scott Bisent was leading the interview process and said last week that the president would meet with the candidates soon.
The five candidates on the shortlist are Federal Reserve Governors Chris Waller and Michelle Bowman, former Federal Reserve Governor Kevin Warsh, Trump's economic adviser Kevin Hassett, and BlackRock's fixed income chief Rick Ridder.
The president hinted twice last week that he still favors Bessent, who again said he does not want the position.
Former Trump economic adviser Stephen Moore said he views the race for the next Federal Reserve chairmanship as a three-way contest: Warsh, Hassett, and Bisent – although Bisent is not officially in the race, according to a Yahoo Finance report.
Kevin Hassett, the White House National Economic Council director who Bloomberg reports have identified as the frontrunner for the position, stated last month that current data suggests the Fed should cut interest rates immediately.
He also said last Monday in an interview with CNBC that it would be irresponsible for the Fed to set a specific interest rate path for the next six months, noting that the bank chairman's job is to monitor economic data and make the appropriate decision accordingly.
It should be noted that Powell’s term as Chairman of the Federal Reserve ends in May 2026, while his membership on the Federal Reserve Board of Governors extends until 2028.
