FED

U.S. Treasury Secretary Scott Bessent is clear – the next Chair of the Federal Reserve should not be just a “guardian of interest rates.” In his view, the job requires someone with a broader vision, capable of understanding complex economic dynamics and recognizing the growing responsibilities of the central bank. He also warned that this expanding scope of duties could eventually threaten the Fed’s independence.
Speaking in Washington on August 7, Bessent outlined for Japan’s Nikkei newspaper the key qualities a new leader should possess:

“They must earn the trust of the markets, be able to read and evaluate complex economic data, and think ahead. Historical patterns are useful, but the real focus should be on future trends,” he emphasized.
According to Reuters, Bessent is leading the process of selecting a successor to current Fed Chair Jerome Powell, whose term expires in May. The shortlist already includes experienced economic advisers and former heads of regional Federal Reserve Banks.
When asked about repeated calls from President Donald Trump to aggressively cut interest rates, Bessent commented: “The president makes his views known, but in the end, the Fed is an independent institution.”

A Strong Dollar Is More Than Just a Number
Bessent also explained what his administration means by the term “strong dollar policy.” According to him, it’s not tied to a specific exchange rate, but to maintaining the U.S. dollar’s status as the world’s primary reserve currency.

“If we maintain sound economic policies, the dollar will remain naturally strong,” he said.
Bessent has previously discussed currency issues with Japanese Finance Minister Katsunobu Kato. At the G7 meeting in May, they agreed that the dollar–yen exchange rate was consistent with economic fundamentals at that time. In June, the U.S. Treasury advised the Bank of Japan (BoJ) to continue gradually tightening monetary policy, which it believes could help “normalize” the weak yen.
He stressed that as long as the BoJ focuses on key fundamentals such as inflation and GDP growth, the market will adjust exchange rates on its own. In his view, BoJ Governor Kazuo Ueda and his team are more concerned with achieving their inflation target than defending a specific currency level.

Japan’s Cautious Central Bank Moves
Last year, the BoJ ended decades of large-scale stimulus and in January raised short-term rates to 0.5%, concluding that Japan was close to sustainably achieving its 2% inflation target. Since then, however, it has proceeded with great caution.
Analysts say this slow pace is one of the reasons behind the yen’s weakness. Although inflation in Japan has been above 2% for more than three years, Ueda warns that policymakers must carefully consider potential risks, such as the impact of U.S. tariffs on Japan’s fragile economy.

High-Profile Names in the Running to Replace Powell
Currently, there are about ten possible candidates to succeed Powell, including:
🔹 James Bullard – former president of the St. Louis Fed, now dean of the business school at Purdue University.

🔹 Marc Sumerlin – former economic adviser to President George W. Bush.

🔹 Kevin Hassett – director of the National Economic Council.

🔹 Kevin Warsh – former Fed governor.

🔹 Christopher Waller – current Fed governor.
Trump has made it clear he wants a chair willing to lower rates. Hassett, Warsh, and Waller have already expressed openness to such moves. Bullard said in May that he believes the Fed could cut rates by September. Sumerlin’s stance on monetary policy is not publicly known.
The president is also moving quickly to fill other key roles – following the resignation of Fed Governor Adriana Kugler, a new board member is to be appointed before January 31. Stephen Miran of the Council of Economic Advisers will end his term, and Trump is also seeking a candidate for a new 14-year term starting February 1.

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The U.S. financial landscape is buzzing after President Donald Trump initiated a major shake-up at the Federal Reserve.

Stephen Miran Steps In

Trump has nominated Stephen Miran, Chair of the Council of Economic Advisers, to fill a short-term vacancy on the Fed Board. This move comes after the departure of Adriana Kugler, with Miran expected to serve until early 2026. While temporary, his appointment gives Trump a stronger voice inside the central bank at a critical policy moment.

Fed Chair Search Heats Up

The bigger question remains: Who will lead the Fed next?
Trump’s shortlist now features Kevin Hassett and Kevin Warsh as frontrunners — both advocates for lower interest rates. Other notable names include Christopher Waller, James Bullard, and Marc Sumerlin. Current Fed Chair Jerome Powell is set to finish his term in May 2026, but speculation is mounting that policy direction could shift well before then.

Markets Cheer Dovish Signals

U.S. stock markets jumped on the news, with traders betting on a softer monetary stance. Analysts believe Miran’s presence could foster greater internal debate at the Fed, potentially paving the way for earlier rate cuts. Wall Street futures and major indexes opened higher as optimism spread.

Bottom Line:
This Fed shake-up signals a possible pivot toward more accommodative policy — a move that could fuel both stock market rallies and renewed debates over inflation risks. Investors should brace for heightened volatility as Trump’s Fed leadership vision takes shape.
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