The race to become the next chair of the Federal Reserve has entered its final stretch, with Treasury Secretary Scott Bessent confirming that President Donald Trump could announce his selection as early as next week. The decision will have profound implications for monetary policy, interest rates, and the direction of the U.S. economy for years to come.

Four Candidates, One Historic Decision

Speaking to CNBC from the World Economic Forum in Davos, Switzerland, Bessent revealed that the field has been narrowed from an initial eleven candidates to four finalists. The president has personally interviewed each of them, and a decision appears imminent.

"My guess is that the president will reach a decision, maybe as soon as next week," Bessent told reporters. "We've had substantial conversations about this. The process started in September with eleven very strong candidates, and we're now down to four."

The four finalists represent a mix of Wall Street experience, academic credentials, and government service:

  • Rick Rieder — BlackRock's Chief Investment Officer of Global Fixed Income, managing over $2.4 trillion in assets
  • Kevin Hassett — Current Director of the National Economic Council and former Chair of the Council of Economic Advisers
  • Kevin Warsh — Former Fed Governor and economic advisor, known for hawkish monetary policy views
  • Christopher Waller — Current Fed Governor, the only sitting central bank official in the running

The Front-Runners

Sources familiar with the process indicate that Kevin Hassett and Kevin Warsh are considered the leading candidates, though Rick Rieder—who was the last finalist to be interviewed—has generated significant interest from the administration.

Rieder's candidacy is particularly noteworthy given his Wall Street background. As the overseer of BlackRock's massive fixed-income portfolio, he brings a practitioner's perspective to monetary policy that differs from the academic economists who have traditionally led the Fed.

"The Fed's monetary policy independence is very important. I think that a lot of the issues around independence are being created by other things that are happening."

— Treasury Secretary Scott Bessent

Powell's Contentious Tenure

The search for a new Fed Chair comes amid ongoing tensions between the White House and current Chair Jerome Powell, whose term expires in May. Trump has publicly criticized Powell for not lowering interest rates fast enough, and the administration has pursued multiple lines of pressure against the current Fed leadership.

Powell has presided over both the emergency rate cuts during the pandemic era and the aggressive tightening cycle that followed. While inflation has moderated significantly from its 2022 peaks, the Fed has maintained a cautious stance, keeping rates higher than the administration prefers.

The Justice Department has also subpoenaed Powell regarding the renovation project at Fed headquarters, though the relevance of this investigation to monetary policy remains unclear.

What Each Candidate Would Mean for Markets

Each finalist would bring a distinct approach to the nation's central bank, with potentially significant implications for investors:

Kevin Warsh

Known as a monetary policy hawk, Warsh served on the Fed Board during the 2008 financial crisis and later became a critic of the Fed's prolonged easy-money policies. His appointment could signal a more aggressive approach to maintaining price stability, potentially keeping rates higher for longer.

Kevin Hassett

As a longtime economic advisor with close ties to the administration, Hassett would likely be more receptive to White House input on monetary policy. His academic background and policy experience could translate to a more growth-focused Fed.

Rick Rieder

The BlackRock executive would bring a market-first perspective to the Fed, with deep experience in how monetary policy transmits through financial markets. His appointment could signal a more pragmatic, less ideological approach to rate-setting.

Christopher Waller

As the only current Fed official in the running, Waller represents continuity. He has generally aligned with the Fed's recent policy direction while occasionally expressing views that lean toward easier policy when appropriate.

Bessent's Role and Recusal

Treasury Secretary Bessent has overseen the screening process but has not indicated a personal preference among the candidates. Notably, Trump has confirmed that Bessent himself is not interested in the Fed Chair position, removing any potential conflict of interest from the selection process.

Market Implications

The Fed Chair nomination will be closely watched by markets, as the next leader will guide monetary policy through a complex economic environment that includes lingering inflation concerns, trade policy uncertainty, and questions about the sustainability of recent economic growth.

What Investors Should Watch

  • Timing: An announcement next week would come just days before the Fed's January policy meeting
  • Senate confirmation: Any nominee will face confirmation hearings that could surface policy disagreements
  • Transition period: Powell's term runs through May, creating a multi-month overlap with the new nominee
  • Policy signals: Markets will parse every statement from the nominee for clues about the future rate path

With a decision potentially days away, investors should prepare for volatility as markets digest what could be one of the most consequential personnel decisions of the Trump administration.