United States Treasury Secretary Scott Bessent says the next chairman of the Federal Reserve should be someone capable of making broad adjustments and not just interest rate adjustments. He also cautioned that the central bank’s growing range of duties could threaten its autonomy.

The Treasury Secretary made this known in Washington on August 7, describing the qualities that the candidate needs to possess. “It’s someone who has to have the confidence of the markets, the ability to analyze complex economic data,” he told Japan’s Nikkei. He added that the next chair should be focused on future trends rather than relying too heavily on historical patterns.

According to reports by Reuters, Bessent is part of the delegation chosen to find a successor for current Fed boss Jerome Powell, who is expected to leave when his term expires in May. The candidate list includes an experienced economic adviser and a one-time head of a regional Federal Reserve Bank. When asked about President Donald Trump’s repeated public calls for lower interest rates, Bessent said the president makes his position known, but stressed that “at the end of the day, the Fed is independent.”

Treasury Secretary discusses “strong dollar” strategy

Discussing the currency strategy, the Treasury Secretary mentioned that the concept of a “strong dollar” policy adopted by this administration is linked to the dollar’s position against other currencies. “The strong dollar policy is to have policies that continue to keep the U.S. dollar the reserve currency,” he said. “And if we have good economic policies, then the dollar will naturally be strong.”

Bessent noted that he has previously held talks on exchange rates with Japan’s Finance Minister Katsunobu Kato. In May, during a G7 meeting, they concluded that the dollar-yen exchange rate at that moment aligned with underlying fundamentals. In June, the Treasury Department informed Congress that the Bank of Japan should maintain its course of policy tightening, which it argued would help “normalize” the yen’s weakness.

The Treasury Secretary stated that he believes the BOJ should focus on fundamentals, such as inflation and growth, and that exchange rates will adjust on their own. He said Governor Kazuo Ueda and the BOJ board are aiming for an inflation target rather than a currency level. The BOJ wrapped up a decade of large-scale stimulus last year and raised short-term interest rates to 0.5% in January, noting that Japan was moving closer to its 2% inflation goal.

List of Powell’s replacements grows

Meanwhile, there are now about 10 possible replacements for Powell. Among them are former St. Louis Fed President James Bullard, now dean of Purdue University’s business school, and Marc Sumerlin, who served as an economic adviser to President George W. Bush. National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh, and current Fed Governor Christopher Waller are also being considered.

Trump has mentioned that he wants a chairman who will be willing to cut rates. Hassett, Warsh, and Waller have all indicated openness to lowering borrowing costs. Bullard said in May he believed the Fed could reduce rates by September. Sumerlin’s recent stances on monetary policy are not publicly known. The president moved quickly to fill another Fed Board position this week after Governor Adriana Kugler resigned. Stephen Miran from the Council of Economic Advisers will finish her term, which ends January 31. Trump is also continuing his search for a nominee to fill the upcoming 14-year term starting February 1.

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