U.S. Treasury Secretary Becerra: Announcement of the Federal Reserve Chair candidate may come before Christmas, the Federal Reserve should return to a behind-the-scenes role

U.S. Treasury Secretary Becerra stated on November 25 that President Trump may announce the new Federal Reserve Chair nominee before Christmas, providing the market with a relatively clear policy timeline.

On Tuesday local time, according to media reports, Becerra, who is responsible for finding Powell's successor, revealed in an interview that he still has one interview to complete and will not speculate on who will become the Federal Reserve Chair at this time. Becerra said:

"I think the president is likely to announce news before Christmas. But it entirely depends on his discretion, whether before the Christmas holiday or after the New Year. But I think everything is progressing smoothly."

Becerra also proposed reforms to the Federal Reserve's functions, believing that the central bank should "return to the background" and simplify its complex policy toolbox. He specifically pointed out that the ample reserves system established by the Federal Reserve has shown cracks, and although policymakers decided to stop balance sheet reduction starting in December to maintain liquidity, the current variety of tools, including the standing repo facility, makes the system overly complex. He stated:

"I think we must push for simplification. It's time for the Federal Reserve to step back, as it did in the past, to restore stability and truly serve the American people."

The Secretary also questioned the current communication mechanism of the Federal Reserve, implying that central bank officials speak too frequently. He emphasized that there is a complex interrelationship between monetary policy, the balance sheet, and regulatory policy, which is a key dimension they are focusing on in selecting the new chair.

Previously, Trump has continuously pressured the Federal Reserve to cut interest rates, even threatening to fire them, stating that he "really wants" to fire Powell and encouraging Becerra to "work to influence" the Federal Reserve Chair to lower the key interest rate. Trump even jokingly told Becerra, "If you don't solve the problem quickly, I'll fire you." In response, Becerra said:

“If you were in the room at the time, you would know he was definitely joking. Monetary policy has become very complex now; it's not just as simple as cutting rates.”

The current term of Federal Reserve Chair Powell will expire in May 2026. Currently, there is a divergence within the Federal Reserve regarding the necessity of further rate cuts. According to recent statements from New York Fed President John Williams, the market generally expects the FOMC to approve a third consecutive rate cut at the December meeting.

It is understood that the final candidate list includes National Economic Council Director Kevin Hassett, former Governor Kevin Warsh, BlackRock executive Rick Rieder, as well as current Federal Reserve Governors Christopher Waller and Michelle Bowman