'We could easily do a 50-basis-point cut'
Two prominent candidates for Federal Reserve chair publicly advocated for aggressive interest rate cuts, aligning with president Donald Trump’s repeated calls for monetary easing.
Economist Marc Sumerlin, managing partner at Evenflow Macro and former senior economist under president George W. Bush, told CNBC that lowering the Fed’s key rate would be an easy decision now.
“We could easily do a 50-basis-point cut... without disrupting anything at all. So it seems like pretty much a no-brainer to me,” Sumerlin said. He confirmed receiving a White House call last Wednesday informing him of his inclusion on the candidate list.
Wall Street veteran David Zervos, chief market strategist at Jefferies, also endorsed rate cuts during a CNBC interview Thursday. For three consecutive Fed meetings, he has advocated half-percentage-point cuts in the federal funds rate.
“I think there is a reasonable storyline, a very cogent storyline, that suggests monetary policy is restrictive,” Zervos said. He argued for bringing “more market-savvy, more market-competent people” into monetary policy decisions.
Trump administration expands search
The Trump administration is reportedly evaluating 11 candidates to replace Federal Reserve chairman Jerome Powell when his term expires in May, according to two administration officials who spoke to CNBC. The expanded list includes three previously unnamed contenders: Zervos, former Fed governor Larry Lindsey, and BlackRock’s chief investment officer for global fixed income Rick Rieder.
The officials described a “deliberative process” where Treasury secretary Scott Bessent will interview all candidates, narrow the list and present final recommendations to Trump, CNBC reported. The size of the candidate pool suggests a decision may not be imminent and could require considerable time, though officials would not provide a timeline.
The complete list includes current Fed officials vice chair for supervision Michelle Bowman, governor Chris Waller and vice chair Philip Jefferson, Bloomberg News reported. Other candidates are National Economic Council director Kevin Hassett, former Fed governor Kevin Warsh, Sumerlin, Dallas Fed president Lorie Logan, and former St. Louis Fed president James Bullard.
Among current Fed officials, Bowman and Waller both dissented in July against keeping rates unchanged, favoring a 0.25-percentage-point cut, according to Mint. Logan has taken a more hawkish stance, warning about easing while inflation remains elevated. Jefferson has closely aligned with Powell on policy decisions.
Independence concerns
Sumerlin emphasized the importance of Fed independence, noting candidates must be “prepared to deal with” criticism while doing “the best job you can for the American people.” He described close ties to Bessent, saying they have discussed monetary policy “weekly for probably 12 years.”
Both candidates’ positions align directionally with Trump’s repeated calls for Fed rate cuts. The president has criticized Powell as a “loser” and “stupid” while advocating cuts of up to 3 percentage points.
Bessent told Japan’s Nikkei the next chair should examine “the whole organization” and have market confidence while being “very attuned to forward thinking, as opposed to relying on historical data.” Despite Trump’s public rate cut advocacy, Bessent maintained “the Fed is independent.”
The Federal Reserve’s next policy meeting is September 16-17, with the administration’s final decision expected this fall.
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