Fed Chair Succession Battle: Treasury Secretary Bessent says "We cannot just look at the Intrerest Rate"

U.S. Treasury Secretary Scott Bessent recently provided an in-depth explanation during an interview with the Nikkei News regarding the discussions surrounding the candidates for the new Fed chair.

What does the next Fed chair need?

According to Bessent, the successor cannot be a “rate-hiking robot.” He listed three hard indicators:

Market Confidence — Must be recognized by the financial markets Data Analysis Capability — Able to handle complex economic data, cannot follow historical trends. Forward Thinking — One must look at trends, not always backward.

There is an implicit meaning here: Trump has been calling for interest rate cuts, but Bessent is hinting that no matter how much political pressure there is, the “Fed is ultimately independent.”

Strong Dollar ≠ Fixed Exchange Rate

Bessent also clarified a hot topic: “the strong dollar policy” is not about pegging the dollar to a specific exchange rate number, but about maintaining the dollar's status as a reserve currency through sound economic policies. In other words, as long as the fundamentals are strong, the exchange rate will naturally follow.

He also pointed out the Bank of Japan: as long as the Bank of Japan focuses on inflation and growth fundamentals, the yen depreciation issue will adjust automatically. (Implying: Don't blame us, it's your policy issue)

10 candidates are competing for Powell's position

Currently, there are about 10 candidates, including:

• James Bullard (former president of the St. Louis Fed, currently the dean of Purdue University’s Krannert School of Management)
• Kevin Hassett (Director of the National Economic Council, pro-rate cut)
• Kevin Warsh (former Fed governor, open stance)
• Christopher Waller (current Fed governor, supports rate cuts)
• Marc Sumerlin (former economic advisor to George W. Bush)

Among them, Hassett, Warsh, and Waller all clearly stated their willingness to consider interest rate cuts. Bullard mentioned in May that rate cuts could potentially begin in September. The positions of these candidates are generally quite “Trump-friendly.”

Time is of the essence

Jerome Powell's term expires in May, so this decision needs to be finalized quickly. Meanwhile, Trump has swiftly filled another vacancy on the Fed board this week — Stephen Miran will replace the resigned Adriana Kugler, with a term ending on January 31.

Underlying Logic: The next Fed chair must not only have market confidence but also balance independence and political pressure - this is a test.