Treasury Secretary Bessent met this week with Warsh, Lindsey and Bullard as Fed chief search continues

Core Viewpoint - The search for the next Federal Reserve chair is ongoing, led by Treasury Secretary Scott Bessent, who is meeting with various candidates and pushing for reforms within the Fed [1][2][4]. Candidate Selection - Bessent has met with former Fed officials Lawrence Lindsey, Kevin Warsh, and James Bullard, aiming to add one or two names to President Trump's shortlist [2][3]. - The broader group under consideration includes 11 economists, comprising former and current central bankers and market strategists [3]. Proposed Reforms - Bessent advocates for the Fed to organically reduce its $6 trillion bond portfolio, which includes Treasurys and mortgage-backed securities, without disrupting markets or the economy [4]. - He aims to lessen the Fed's economic footprint and has expressed concerns about the complexity of the Fed's current toolkit [4][6]. Current Fed Context - The Fed is under scrutiny from the White House, with calls for an interest rate cut, which has not occurred since December 2024 [5]. - Markets anticipate a quarter percentage point reduction in the upcoming Federal Open Market Committee meeting [5]. Leadership Changes - Chair Jerome Powell's term ends in May 2026, and he is expected to be replaced in his current role, although he could remain as a governor for two additional years [7]. - The Senate is set to vote on nominee Stephen Miran for a Board of Governors vacancy, while Trump has attempted to remove Governor Lisa Cook amid allegations of mortgage fraud, though legal challenges have stalled this effort [7].