FACTBOX-Finalists for top Fed job want to cut rates, but diverge from there

By Howard Schneider

WASHINGTON, Jan 20 (Reuters) - The four candidates interviewed by President Donald Trump as finalists to replace Federal Reserve Chair Jerome Powell in May share a desire to cut interest rates, but diverge on other aspects of monetary policy and come from different backgrounds.

Trump's decision, which he says he will announce in weeks, takes place as his administration threatens criminal indictment of Powell, which the Fed chief says is an intimidation tactic that undermines Fed independence.

Kevin Warsh is a former Fed governor who also enjoys close connections to Trump's circle. White House economic adviser Kevin Hassett is a tested Trump booster through two Republican administrations. Fed Governor Christopher Waller is an influential figure who is already steering the U.S. central bank towards lower rates and a more conservative approach to its broader activities. And Rick Rieder, BlackRock's chief investment officer of global fixed income, is a financial markets veteran with no work history either in government or at the Fed.

They share some general views: Besides agreeing that rates should be lower, in line with Trump's main gripe about the Fed, they also think artificial intelligence could make the economy more productive and able to grow faster without fueling inflation.

But the details of their recent public comments also show some differences on issues like how fast or far rates might fall, their approach to managing the Fed's balance sheet, and their views about how the central bank should be run.

Below are thumbnail sketches of each, with key quotes on aspects of the job they are contending for:

HASSETT

Hassett, 63, has a PhD in economics and served on the Fed staff in the 1990s before joining the American Enterprise Institute think tank where he focused on tax policy and the advantages of boosting the supply side of the economy. Critics have slammed what they see as his analytical missteps, from co-authoring "Dow 36,000," a book that argued stocks were significantly undervalued in 1999, shortly before the dot-com bubble burst, or his use in Trump's first term of charts suggesting the COVID-19 pandemic would dissipate quickly on its own.

Since becoming the head of the White House's Council of Economic Advisers in Trump's first term, Hassett has remained in his orbit, advising Trump son-in-law Jared Kushner's Affinity Partners investment firm after the 2020 presidential election, and being promoted to head the National Economic Council on Trump's return to the White House. Of the Fed finalists he is arguably the most bullish on the impact of administration policies that he has helped craft.

On interest rate cuts: "I think there is plenty of room to do it ... With productivity growth plus capital stock growth, you're looking at like underlying potential GDP growth that's way north of three, maybe north of four." - Wall Street Journal CEO Council, December 8, 2025.

On the balance sheet: Hassett has not spoken in detail about Fed balance sheet policy. But key figures in the Trump administration, most notably Treasury Secretary Scott Bessent, have cited the central bank's asset holdings as evidence of overreach and the need for what Bessent called "an honest, independent, and nonpartisan review of the entire institution."

On the Fed's culture and independence: "There are a lot of things that need to be addressed and either fixed with new people or fixed with new ideas about how to run things." - Fox Business, December 8, in an interview that included allegations the Fed was partisan, that its research focus had strayed too far from core issues, and that the presidents of the 12 regional reserve banks needed to be reviewed to see "who's doing a good job and who is not."

In a CNBC interview on January 12, 2026, he said: "The Fed has amongst the highest interest rates on earth right now, and President Trump is frustrated with that, but I don’t think that has anything to do with what was going on this weekend (when Powell disclosed the Department of Justice investigation)."

WALLER

Waller, 66, is a Nebraska native with a PhD in economics who taught at the University of Notre Dame before becoming research director of the St. Louis Fed in 2009.

He has written extensively on monetary policy, and, after being appointed by Trump to the Fed's Board of Governors in 2020, used that background to shape monetary policy debates with arguments grounded in theory and empirical analysis. Those efforts helped push the Fed towards faster rate hikes to fight inflation in 2022, and more recently to begin cutting rates based on evidence of job market weakening.

His chances of replacing Powell next May could suffer from the lack of a more personal connection with Trump, and from the president possibly feeling that his decision to promote Powell from within the Fed in late 2017 had backfired. As a sitting policymaker, whose words could affect financial markets, Waller, of the top contenders, has spoken most precisely about the issues and outlook, which may make him seem too temperate - a fact that, along with his perceived independence from Trump, has made him the favored choice of market participants.

On interest rate cuts: "We're 50 to 100 basis points off of neutral. We still got some room. We could bring things down." - Yale School of Management CEO Summit, December 17, 2025.

On the balance sheet: "Our balance sheet grows naturally over time from currency demand and then just demand by banks for reserves ... We're probably at about the size of the balance sheet we want." - Yale School of Management CEO Summit, December 17, 2025.

On the Fed's culture and independence: Waller does not see the Fed as hobbled by partisanship, unlike Warsh and Hassett. As a Trump appointee, he has both supported and dissented from Federal Open Market Committee policy decisions. He has shared concerns about mission creep, however, and worked internally to narrow an emerging focus on social issues and trim the staff.

WARSH

Warsh, 55, is a lawyer and veteran of past Republican administrations who currently advises investment legend Stanley Druckenmiller and is a distinguished visiting fellow in economics at Stanford University's Hoover Institution. His father-in-law, Ronald Lauder, was an early supporter of Trump, and Warsh was considered for the top Fed job during Trump's first term.

He was a U.S. central bank governor from 2006 to 2011, and while credited by then-Fed Chair Ben Bernanke as an effective conduit with Wall Street, Warsh opposed the extent of Bernanke's bond-buying policies and ultimately resigned as a result.

He has been a steady critic of the Fed ever since, and grew sharper in that criticism as he emerged as a contender to replace Powell, with calls for "regime change" and "breaking some heads" that his critics say have not been backed up with details about how he'd reform the institution.

On interest rate cuts: "We can lower rates a lot and, in so doing, get 30-year fixed-rate mortgages so they're affordable ... Lower interest rates with the kind of technology revolution the president's policies have permitted, the massive investment that's happening in the economy domestically and from foreigners, this is the seed corn for our productivity revolution." - Fox Business, October 24, 2025.

On the balance sheet: The U.S. central bank's asset holdings are "a proxy for the Fed's growing imprimatur on the economy ... Each time the Fed jumps into action, the more it expands its size and scope, encroaching further on other macroeconomic domains." - Speech to the International Monetary Fund, April 25, 2025.

On the Fed's culture and independence: "I observe the modern central bank to be a bit too willing to traffic in contraband ... 'Climate change' and 'inclusion' are politically charged issues. People of good conscience have their own views and motivations ... The Fed, however, has neither the expertise nor the prerogative to make political judgments in these areas." - Speech to the IMF, April 25, 2025.

RIEDER

As chief investment officer of BlackRock's global fixed income business, Rieder manages $2.4 trillion in assets with decades of private-sector experience. He has an MBA from the University of Pennsylvania's Wharton School and is a prolific public commentator on macroeconomic trends and markets.

On interest-rate cuts: "The Fed’s got to get the rate down to 3%: I think that’s closer to equilibrium… we have what is potentially a labor problem… you got to get the rate to 3, and then you’ve got to look at where we are." CNBC interview, January 13, 2026.

On the balance sheet: "Ongoing runoff of mortgage-backed securities from its balance sheet is further exacerbating the ongoing housing affordability crisis. These are precisely the channels through which tight policy can amplify inequality and suppress labor mobility and household formation." Note to investors, October 8, 2025.

On the Fed's culture and independence: Rieder has not paired his criticism of the Fed's monetary policy with calls for institutional reform. On January 13, 2026, after Powell's disclosure of the DOJ probe, he said "I think there's a lot of drama, there's a lot of discussion about it. I think at the end of the day, whoever's in that seat, not just that seat, the whole committee, they're going to look at the data, evaluate the data and make whatever the right decision is." In July 2024, even as he took the Fed to task for not lowering interest rates he told Barron's Live podcast, "I think people at the Fed are super smart."