U.S. President Donald Trump said on Tuesday he had removed Treasury Secretary Scott Bessent from consideration for an open seat on the Federal Reserve's Board of Governors, but said he would "very shortly" announce his choice.

In an interview with CNBC, Trump said Fed Governor Adriana Kugler's decision to vacate her seat early was a "pleasant surprise." The departure of Kugler, whose term would have ended on January 31, appears to have accelerated Trump's planning for the U.S. central bank, giving him an immediate opening to fill with a person who could also be promoted to the top policymaking role when Fed Chair Jerome Powell's term ends in May.

"It'll be one of four people," Trump said, adding that he considered both current White House economic adviser Kevin Hassett and former Fed Governor Kevin Warsh as "very good" possibilities. He did not name the other two, but is reportedly considering current Governor Christopher Waller, who has advocated rate cuts but not at the pace or extent Trump wants.

"There are numerous people that are qualified," Trump said. "I am going to be announcing that very shortly," the president said in reference to naming a replacement for Kugler, who was appointed to the Fed's board by former President Joe Biden.

Trump said Bessent would not be in the running for the position because he wants to remain in the top Treasury job.

The nominee would, at least initially, serve the few months remaining in Kugler's term.

But Trump could be explicit that he plans for that person to then be nominated to a full 14-year term after that time, and to also be his choice to replace Powell when the Fed chief's term expires next May - giving his nominee several months and several policy meetings to begin to influence the policy debate.

"A lot of people say, when you do that, why don't you just pick the person who is going to head up the Fed? That's a possibility too," Trump said.

The president has been critical of Powell for not cutting interest rates since Trump returned to power in January, and contemplated trying to fire him, even as Fed policymakers balance evidence of both a slowing economy and a weakening job market against the fact that inflation remains well above the central bank's 2% target and is expected to move higher.

The Fed is charged by Congress to maintain stable prices and maximum employment, and is potentially facing a situation where the two goals conflict with each other - posing a painful set of tradeoffs.

The nominee to fill Kugler's seat will need to be confirmed by the Senate, and would require another Senate vote for a full 14-year term early next year. The nomination for the next Fed chief would require a separate Senate confirmation process.

Source: Fxstreet