Fed Chair Search as Elusive as "Hunting a Unicorn," Trump Frustrated with Current Candidates

President Trump's search for a new Federal Reserve Chair has become akin to a quest for a "unicorn," with his previous criticisms of the Fed sparking a strong backlash, complicating the decision with numerous factors. Trump desires a successor to Powell who meets multiple criteria: unwavering loyalty to the President, a willingness to aggressively cut interest rates, credibility with both Wall Street and the MAGA (Make America Great Again) base, support in the Senate, and possessing the camera-ready, "leading-man" image Trump consistently seeks. This already delicate balance has grown more challenging due to a Justice Department investigation into the Fed. A key Republican Senator has already vowed to block any Fed Chair nominee from Trump, and tensions could escalate further due to Trump's threats regarding Greenland. A stark reality confronts everyone: none of the leading candidates fully satisfies all these conditions. "Finding a choice that satisfies both President Trump and the bond market is not easy unless he fundamentally reconsiders his demands," said Tobin Marcus, Head of US Policy and Politics at Wolfe Research. Trump's finalist candidates include National Economic Council Director Kevin Hassett, BlackRock executive Rick Ried, Fed Governor Christopher Waller, and former Governor Kevin Warsh. According to people familiar with the matter, Trump feels somewhat frustrated with the current slate of candidates. Donald Trump has complained both privately and publicly about the advice he received in 2017, when Treasury Secretary Steven Mnuchin recommended Powell to him. Until last week, Hassett was widely seen as the frontrunner, but Trump subsequently indicated he might prefer to keep Hassett at the White House. Meanwhile, BlackRock's Ried has gained momentum, partly because he might secure Senate confirmation more easily, although the required asset divestments could complicate matters. However, all four candidates have potential fatal flaws. Ried's position at BlackRock could expose him to MAGA criticism of "globalist" bankers; Hassett's White House role raises concerns about the Fed's independence under his leadership; Waller, already a central bank governor, faces questions about his impetus for the reforms Trump seeks; and Warsh lacks a dovish record on monetary policy and is not a well-known MAGA figure. Treasury Secretary Scott Bessent, leading the selection process, has been careful not to show public favoritism toward any candidate. "President Trump has been very thoughtful about who to select as Fed Chair and is asking 'the exact questions you, I, and the market are asking'," Bessent told Larry Kudlow on Fox Business Network on Friday. "Who can carry the committee? Who has gravitas?" Bessent said. "Who has the open-mindedness of a Greenspan, who recognized that America might be in a productivity boom like the '90s, and not just slam on the brakes because they're spooked by high GDP numbers?" "Any reporting on the process for selecting the next Fed Chair before President Trump makes an announcement is nothing more than baseless speculation," White House spokesman Kush Desai said in a statement. The Treasury Department did not respond to a request for comment. Another variable is Powell himself. The Fed Chair has not indicated whether he will follow precedent and leave entirely when his term ends in May, or remain as a governor until his term concludes in 2028. Powell issued an unusual public statement earlier this month, referencing the Justice Department subpoena, calling the investigation a "pretext" for Trump to push for rate cuts. Investors have reacted calmly to the turmoil, betting the government will not prosecute Powell solely over his 2025 congressional testimony regarding the Fed building renovation. The US Attorney for the District of Columbia, Jeanine Pirro, who issued the subpoena, stated she is merely seeking documents from the Fed, a comment seen as de-escalatory. Over a recent weekend, Trump's announcement of tariffs on European allies for blocking his attempt to purchase Greenland served as a reminder that he often forcefully pursues measures and threats initially dismissed as fanciful. It remains unclear precisely when Trump will decide on the Fed Chair nominee. The President told reporters in Florida on Monday night that he knows who he wants and will announce it "at some point," while Bessent told reporters in Davos on Tuesday that a decision could come "as early as next week."