Is the proposer of the "shadow Fed chair" expected to become the next chair of the Federal Reserve? Bostic responds modestly: My current job is great

According to the Zhitong Finance APP, with recommendations from top advisors in the U.S. political and financial sectors, current U.S. Treasury Secretary Scott Basset is gaining increasing attention from investors. He is viewed by these prestigious advisors as a leading candidate for the next Chair of the Federal Reserve. Basset is also the proponent of the current popular concept in the financial field known as the "shadow Fed Chair," advocating for the early appointment of the next chair to allow this "quasi-Fed Chair" to speak publicly and participate in policy communication and expectation management during Jerome Powell's remaining term, thereby weakening Powell's influence and securing monetary policy initiative for Trump's economic agenda.

U.S. President Donald Trump stated last Friday that he will "soon" appoint a new chair to succeed Powell, whose term will officially end in May 2026. According to informed sources, the previous list of candidates for the Fed Chair included former Fed official Kevin Warsh, whom Trump interviewed last November for the position of Treasury Secretary.

Media reports indicate that several informed sources have stated that Basset, who is leading Trump's economic revival plan in foreign trade, taxation, and financial regulation, has now become one of the contenders for the position. Two informed sources noted that formal interviews have not yet begun.

In response to media requests for comments, Basset briefly stated, "I have the best job in Washington right now. President Trump will choose the chair candidate that best aligns with the economy and the interests of the American people."

At the White House, a senior government official, who wished to remain anonymous, disputed the reports, claiming that the informed sources cited were spreading false information, but did not provide further details.

It is understood that when asked about the popular Fed Chair candidate Kevin Warsh, Trump had previously publicly stated that Warsh indeed received high praise.

According to U.S. political tradition, as the U.S. Treasury Secretary, Basset will play a key role in the process of the U.S. President selecting and interviewing the next Fed Chair. It remains unclear whether Basset will avoid the relevant procedures when Trump begins to make decisions.

Highly Regarded Basset

"Given the high level of trust in Scott Basset from the global financial community, he is the obvious choice," said Tim Adams, President and CEO of the Institute of International Finance. "He is a dark horse." Adams added that Warsh, who served as a Fed governor from 2006 to 2011, is also a good choice. When asked about Warsh, Trump stated last Friday, "He has a very high reputation."

Basset, a "hedge fund veteran" with years of experience on Wall Street, is highly regarded in the asset management sector and has consistently been at the forefront of U.S.-China trade negotiations, which is considered one of the most important agreements in President Trump's efforts to reshape the global trade landscape.

"Scott Basset has proven he can implement Trump's economic agenda during the extremely turbulent first six months," said former White House Chief Strategist and presidential outside advisor Steve Bannon. "He is not only a cabinet star but also a safe choice for global capital markets."

Trump first nominated Powell for the position in 2017 but has since frequently complained that Powell is not aggressive enough in cutting interest rates. Last month, during a meeting at the White House, Trump again pressured Powell to lower borrowing costs According to the latest dot plot of interest rates, Jerome Powell and other Federal Reserve officials tend to maintain interest rates unchanged for most of 2025, expecting a maximum of two rate cuts this year. The main reason is the economic uncertainty brought about by Trump's expanding and changing tariff policies. Federal Reserve policymakers generally indicate that the announced tariffs will weigh on economic growth and push up inflation.

Regardless of who the Senate ultimately confirms for this position, it must demonstrate to the world that the Federal Reserve's independence from political interference remains intact. Trump has repeatedly stated that Powell's decision not to cut rates is a mistake and has claimed that he should have a say in interest rate decisions, raising market concerns about whether the next chair will be influenced by him.

Adam S. Posen of the Institute of International Finance stated that whether it is Bessenet or Walsh, "both will gain the trust of the financial community in maintaining the independence of the Federal Reserve."

Renowned American economist and Trump ally Arthur Laffer stated that Bessenet is "excellent, but he already has a job, and his expertise is not in monetary policy." "As I told the president, I believe Kevin Walsh is the perfect candidate for this position," he said.

Other chair candidates previously mentioned include Kevin Hassett, director of the White House National Economic Council, Federal Reserve Governor Christopher Waller, and former World Bank President David Malpass.

The concept of "shadow Fed chair" was proposed by Bessenet

Scott Bessenet first systematically articulated the concept of "shadow Fed chair" during a media interview in November 2024. The idea arose from Trump's dissatisfaction with the Fed's failure to cut rates and concerns about the economic outlook following increased tariffs.

Bessenet believes that this "shadow Fed chair" would provide enough forward guidance on monetary policy to make the market "less concerned about Powell's words."

Trump has repeatedly criticized Powell's hawkish stance on not cutting rates as inconsistent with the current state of the U.S. economy, and maintaining high interest rates for an extended period is a significant drag on the economic growth blueprint of the Trump administration. The concept proposed by Bessenet at that time provided Trump with a new idea: to "soft replace" Powell within the statutory term without touching the legally more challenging impeachment process. However, this concept has sparked intense debate in academia and the market regarding the independence of the Federal Reserve, also bringing Bessenet into the spotlight in discussions about "Powell's successor."