The Trump team is working on restructuring the leadership of the Federal Reserve, with Bowman likely to be promoted to Vice Chair for Financial Supervision, and adjustments made to the list of candidates to succeed Powell

On Wednesday, January 8, according to media reports citing informed sources, Trump's advisors are considering how to reshape the leadership of the Federal Reserve, including promoting Federal Reserve Governor Bowman to the position of Vice Chair of the central bank responsible for financial regulation.

It is reported that Trump's advisors have also begun drafting a list of potential successors to replace Federal Reserve Chairman Powell in May 2026. They will primarily focus on the current Federal Reserve officials' comments on interest rates, making adjustments to the candidates accordingly.

Candidates for the next Federal Reserve Chairman may include: Kevin Hassett, who is about to become the Director of the White House National Economic Council; former White House officials from the George W. Bush administration, Larry Lindsey and Marc Sumerlin; former World Bank President David Malpass; former Federal Reserve official Kevin Warsh; and Federal Reserve Governor Bowman.

Informed sources also stated that current Federal Reserve Governor Waller, who was appointed during Trump's first presidential term, was once considered a potential candidate for Federal Reserve Chairman. However, after he supported a 50 basis point rate cut in September, he may no longer be seriously considered by Trump's team, as Trump described a significant rate cut just weeks before the presidential election as "a political move aimed at keeping someone in office."

Additionally, Cleveland Federal Reserve President Mester, who took office last year, may become a Federal Reserve Governor during Trump's second presidential term, gaining permanent voting rights during her tenure. She voted against the 25 basis point rate cut last December, instead supporting a pause in rate cuts.

Many analysts pointed out that the Vice Chair of the Federal Reserve responsible for financial regulation, Barr, suddenly announced he would end this role early at the end of February but would retain his governor position until 2032. This means Trump will not be able to nominate a "newcomer" outside the Federal Reserve for the regulatory vice chair position.

Trump will only be able to select from the existing seven governors, and the next vacancy for a Federal Reserve governor will not occur until January 2026 when Kugar's term ends, unless a governor resigns before then, which would create an opportunity for Trump to nominate a "newcomer" outside the central bank.

On Wednesday, Waller stated that even if Trump's general tariff policy is implemented, he would support another rate cut, believing that tariffs would not have a significant or lasting impact on inflation, and that the U.S. inflation rate would remain closer to the Federal Reserve's 2% target in the coming months. He acknowledged that he is more optimistic than many Wall Street investors, as financial markets only expect one rate cut this year, and it may not happen until after July.

Bowman was nominated by Trump as a Federal Reserve governor in 2018 as a community banking expert. Besides being known for her hawkish views due to concerns about high inflation, she also strongly opposed Barr's reform proposal to increase capital requirements for large banks, arguing that increasing capital requirements during healthy banking conditions could suppress lending activities, and she believes banks "need better regulation."

Bowman also criticized the Federal Reserve's handling of several bank failures in 2023, including Silicon Valley Bank, and last September became the first Federal Reserve governor in nineteen years to cast a dissenting vote at the FOMC, arguing against a significant 50 basis point rate cut and instead supporting a conventional 25 basis point cut. This seems to align with Trump's criticism of significant rate cuts before the election The Federal Reserve System was established by the U.S. Congress in 1913, consisting of the Federal Reserve Board located in Washington, D.C., 12 regional Federal Reserve Banks across the United States, and the Federal Open Market Committee (FOMC) responsible for interest rate policy formulation.

The Federal Reserve Board has seven members, including a Chair, two Vice Chairs (one responsible for monetary policy and the other for bank supervision), and four Governors. All members are nominated by the President of the United States but must be confirmed by the U.S. Senate to take office.

During Trump's first presidential term, he successfully nominated and appointed two Federal Reserve Governors, Bowman and Waller, and promoted Powell, who was appointed as a Federal Reserve Governor by Obama, to Chair of the Federal Reserve.

After winning the election last year, Trump reiterated that he wanted to have a greater influence on Federal Reserve policy but would not demand Powell's resignation, and Powell also stated that being dismissed by the President prematurely would be illegal.

Some individuals from the legal community and Wall Street investment banks pointed out that Trump has the opportunity to quickly promote current Federal Reserve Governors to fulfill the Federal Reserve's bank supervision functions in a manner more aligned with his preference for loose policies. This reflects the willingness of the Federal Reserve under Powell's leadership to cooperate with the Republican Party on regulatory matters to maintain the independence of monetary policy and avoid setting a precedent for a President to dismiss the Federal Reserve Chair