Bessent Eyes Fed Chair, Sees AI Reshaping Economy in 18 Months

US Treasury Secretary Scott Bessent said he would not rule out leading the Federal Reserve in the future, a statement that gains significance as a political hurdle for replacing current Chair Jerome Powell was removed Friday. In a wide-ranging interview, Bessent also identified artificial intelligence as the core of US economic competitiveness, predicting it would revolutionize American life within "one year, maybe eighteen months."

"I would not on the other hand say ‘no’ to being chairman of the Fed," Bessent said, according to a transcript of the interview. He explicitly ruled out a run for any elected office, but noted the head of the central bank can "shape the course of the economy" from a non-elected position. The comments come as the Justice Department dropped its criminal probe into Fed Chair Powell, a move that clears the way for the Senate to confirm a successor.

Bessent's policy priorities extend beyond monetary policy, focusing on the rapid integration of AI, which he believes will compress costs and boost productivity in unforeseen ways. His framework also includes tax policies aimed at benefiting the bottom 50% of earners and a rollback of post-2008 financial regulations that he argues have stifled smaller banks. The current fed funds rate has been held in a range of 5.25% to 5.50% since July 2023, and Bessent's comments introduce a new potential direction for policy.

The Treasury Secretary's openness to the Fed's top job, combined with the DOJ's decision to end the Powell probe, reshapes the landscape for the future of the central bank. While President Trump has floated Kevin Warsh as a potential replacement for Powell, Bessent's comments establish him as a prominent contender for the role in the coming years, suggesting a potential policy shift toward a more deregulated and technologically-focused economic strategy.

AI to Reshape Economy in 18 Months

Bessent described artificial intelligence as the central force in the next wave of economic prosperity, warning the window for adaptation is closing rapidly. "One year, maybe eighteen months," he said, is the timeframe for the technology to fundamentally alter business operations. He envisions small businesses running on lean human teams augmented by AI agents and sees productivity gains rippling through the entire economy. Bessent also acknowledged the risks, noting that a high-level group meets weekly to monitor AI's rapid evolution and potential for misuse by hostile actors.

Path to Fed Chair Opens as Powell Probe Ends

Bessent’s remarks were made just as the Department of Justice announced it was dropping its criminal investigation into Federal Reserve Chair Jerome Powell over cost overruns on a multi-billion-dollar renovation of the bank's headquarters. The probe had been a significant obstacle to President Trump’s nomination of Kevin Warsh to the Fed board. With the investigation now referred to the Fed's internal inspector general, the path for a change in Fed leadership is clearer. This political development provides critical context for Bessent's calculated remarks, positioning him as a potential successor should the administration seek a new direction after Powell.

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