On August 27 local time, U.S. Treasury Secretary Scott Bessent announced at a White House briefing: "I will submit a list of 3 to 4 candidates for Federal Reserve Chairman to the President within the next 48 hours." This news hit the global financial markets like a bomb, coinciding with the escalation of the "power war" between the Trump administration and the Fed, marking a critical phase in the contest for core control over U.S. monetary policy.
Key Appointments in the Eye of the Storm: Why Nominate Now?
Bessent's nomination move is not coincidental. The Federal Reserve is currently at the center of an unprecedented political storm — the Trump administration dismissed Fed Governor Lisa Cook on August 25 on the grounds of "mortgage fraud," triggering a legal battle. This marks the first direct presidential dismissal of a Fed governor in the 112-year history of the Federal Reserve. The current chairman Powell's term will end in May 2026, and Trump has repeatedly stated it is "extremely unlikely" that Powell will be reappointed, even threatening to fire him early.
More critically, there is an intense game over monetary policy: The Trump administration is eager to drastically lower the current benchmark interest rate of 4.25%-4.5% to 1% to alleviate federal debt interest pressure; however, the Federal Reserve insists that inflation is not yet fully controlled, maintaining rates unchanged for five consecutive times, with Powell repeatedly emphasizing concerns that "tariff policies may exacerbate inflation." Bessent, as Trump's core economic advisor, proposes a "3-3-3" strategy that clearly advocates for deregulation and aggressive economic stimulus, contrasting sharply with the Fed's cautious stance.
Candidate Profiles: Who Will Become Trump's "Monetary Spokesperson"?
Although Bessent did not reveal specific candidates, several popular names have surfaced in light of the Trump team's policy tendencies and market rumors:
Kevin Warsh is seen as the top contender. The former governor, who served as a liaison between the Fed and Wall Street during the 2008 financial crisis, has recently frequently provided policy advice to Trump's transition team, publicly supporting the call for rate cuts and even stating that "tariffs will not have a significant impact on inflation." He was the only governor to question quantitative easing in 2010, and this stance of "limited easing" precisely meets Trump's needs.
Michelle Bowman, a governor nominated by Trump in 2018 and currently the Fed's Vice Chair for Bank Supervision, is known for her strong opposition to increasing bank capital requirements. She voted against a 50-basis-point rate cut during the Fed's meeting in 2024, advocating for a more moderate pace of easing and is seen by Wall Street as a representative of the "regulatory loosening faction."
The most controversial potential candidate is Judy Shelton, an economist who was previously rejected by the Senate for her advocacy of "restoring the gold standard". She has openly criticized the Fed's 2% inflation target as a "disguised confiscation of public wealth," which aligns closely with Trump's criticism of the Fed.
Bessent's nomination standards are shrouded in mystery. As the former chief investment officer of Soros Fund, he prefers candidates with "practical market experience" rather than purely academic backgrounds. Analysis indicates that the final candidate must meet three major criteria: support for aggressive rate cuts, agree to relax financial regulation, and have an open attitude towards Trump's tariff policies.
Power Chess: The Triple Ambition to Control the Federal Reserve
The Trump administration's strategy goes far beyond simply replacing the chairman. Currently, in the 7-member board of the Federal Reserve, Trump has already appointed 3 governors. If he can successfully dismiss Cook and appoint a loyalist, along with the new chairman, it would create a 4:3 majority advantage. Even more concerning is that the terms of the 12 regional Federal Reserve Bank presidents will all expire in February 2026, and their reappointment requires board approval, meaning Trump could complete a comprehensive overhaul of the Federal Reserve system within a year.
This personnel reshuffle is underpinned by profound institutional gamesmanship. Recently defending Trump, Bessent bluntly stated: "The independence of the Federal Reserve comes from the political arrangement with the public," a statement interpreted as a challenge to the century-long independence cornerstone of the Fed. Historians note the striking similarity to the pressure Nixon exerted on Fed Chairman Burns to cut interest rates in 1971, which led to stagflation, ultimately causing U.S. inflation to soar to 13%.
Market Shock: The Dollar's Credibility Faces a Century-Long Test
Following the announcement, the financial markets reacted violently: The 2-year Treasury yield plummeted to 3.7%, reflecting market bets that political pressure will force the Fed to cut rates; meanwhile, the 30-year yield rose to 4.936%, showing investor concerns about the long-term risk of uncontrolled inflation. The dollar index briefly fell to 98.1, extending its year-to-date decline to 9%, while spot gold surged past $3,393 per ounce, hitting a two-week high.
Global capital is voting with its feet. Data shows that foreign official institutions reduced their holdings of U.S. Treasuries by $35.6 billion in the week ending August 20, and global funds have been withdrawing from U.S. thematic funds for three consecutive months. ING's chief economist Blom warned: "The collapse of central bank independence will ultimately be paid for by higher inflation and interest rates."
Ultimate Question: What will happen to the dollar's hegemony?
The power struggle over the Federal Reserve is essentially a contest of monetary philosophy: Can the "politically driven monetary policy" sought by the Trump team replace the century-old principle of "central bank independence" that has maintained the dollar's credibility? The candidate list submitted by Bessent will not only determine the interest rate direction of the United States for the next four years but may also reshape the cornerstone of the global financial order.
It is noteworthy that Bessent has insisted that "the dollar will continue to maintain its status as the world's reserve currency," but the market seems unconvinced. If the new chairman truly becomes a "political mouthpiece," the dollar may face structural depreciation pressure, while the strategic value of alternative assets like the renminbi and gold will significantly increase.
Do you think the Trump administration should respect the independence of the Federal Reserve, or do they have the right to lead the direction of monetary policy? If we get over 10,000 likes, we will deeply analyze each candidate's policy proposals and their impact on global asset allocation!#美联储何时降息？
