The drama around the future leadership of the U.S. Federal Reserve just got a plot twist, and traders are watching closely.
President Donald Trump revealed that Treasury Secretary Scott Bessent, once considered a front-runner to replace Jerome Powell, is out of the running for Fed Chair. This revelation lands just as Fed Governor Adriana Kugler announces her surprise resignation, effective this Friday, opening the door for Trump to further shape the Fed’s direction and potentially its rate path.
Here’s what you need to know and why it matters:
1. Bessent Steps Back But 4 Candidates Remain
Trump says Bessent will not be considered for Federal Reserve chairman
— #John Solomon (#@jsolomonReports)
1:15 PM • Aug 5, 2025
In an interview on CNBC’s Squawk Box, Trump said Bessent told him he’s not interested in leading the Fed. “He wants to stay where he is,” Trump stated, adding that Bessent prefers to keep working alongside him. While Trump didn’t name names, he confirmed that four other candidates are still in play keeping markets guessing.
2. Kugler’s Resignation Creates Opening
Fed Governor Adriana Kugler RESIGNS Trump now gets to install a Fed Governor.
WOULD YOU LIKE TO SEE TRUMP REFORM OR END THE FED?
— #JOSH DUNLAP (#@JDunlap1974)
5:32 PM • Aug 2, 2025
Fed Governor Adriana Kugler’s exit gives Trump the chance to appoint another key ally to the Board of Governors and possibly tip the balance toward a more dovish, pro-cut stance as rate pressure builds. Kugler’s move was called a “pleasant surprise” by Trump, reinforcing that the White House sees an opportunity to steer monetary policy more directly.
3. The ‘Kevins’ Are Back on the Radar
Former Fed Governor Kevin Warsh and Trump advisor Kevin Hassett, both known for favoring lower interest rates, are rumored to be top contenders. Current Governor Christopher Waller, often aligned with Trump’s monetary views, is also reportedly in consideration. That’s three out of the four likely names and they all tilt dovish.
From left, Christopher Waller, Kevin Hassett, Kevin Warsh
4. Powell’s Future Still in Question
While Jerome Powell’s term doesn’t end until May 2026, Trump’s repeated jabs at the current Chair have reignited chatter about a potential “shadow chair” someone who could act as a counterweight within the Fed. Trump hinted that it’s “a possibility,” though he hasn’t confirmed any such plan. Still, the market won’t ignore the political pressure.
5. Rate Cuts in September? Market Thinks So
The Fed kept rates steady last week at 4.25%–4.50%, but expectations for a September cut are climbing. Trump, who has accused the Fed of political bias for not cutting faster, claimed Powell once promised to keep rates low. Whether true or not, it’s clear the White House is gunning for looser policy and soon.
Here’s the Takeaway:
Trump’s Fed influence is rising again and the leadership race is more than politics; it’s market-moving. With Bessent stepping aside and Kugler exiting, the president has a chance to reshape the central bank just as the rate-cut debate heats up. Traders betting on September easing should keep one eye on the Fed calendar and the other on the West Wing.