The decision is not final, the people cautioned, and Trump could change his mind at any time. Yet his preference for Powell dims current Fed Chair Janet Yellen’s chances for a second term at the helm of the world’s leading central bank.

Yellen’s first term ends in February, and Trump has been working from a shortlist of five candidates developed by his advisers that includes the current chair and Powell. Other candidates he’s considering are Stanford University economist John Taylor, former Fed governor Kevin Warsh and National Economic Council Director Gary Cohn.

A nomination for Powell is seen by investors as signalling continuity for monetary policy. Speculation he will ultimately be Trump’s pick drove them to buy US stocks and bonds.

Trump’s advisers have been steering him toward choosing either Powell or Taylor for the job, according to several people familiar with the deliberations. All of the people who discussed the matter did so on condition of anonymity.

Powell is favoured by Treasury Secretary Steven Mnuchin, and Taylor by vice-president Mike Pence, people familiar with the matter have said.

Powell, a Republican who was appointed to the board in 2012 by President Barack Obama, has backed Yellen’s gradual approach to raising interest rates and earned a reputation as a non-ideological pragmatist.

A lawyer by training, Powell managed the Fed’s response to the 2014 flash crash in Treasury debt. The 64-year-old served at the Treasury Department under President George HW Bush, eventually ending up as undersecretary for domestic finance.

Trump completed his interviews with Fed chair contenders last week, sitting down with Yellen at the White House on October 19 for half an hour.

Yellen, whose term ends on February 3, came across as polished during their meeting, and in the subsequent days, Trump went out of his way to praise her.

“In one way, I’d have to say, you’d like to make your own mark, which is maybe one of the things she’s got a little bit against her,” Trump said. “But I think she’s terrific, we had a great talk, and we’re obviously doing very well together if you look at the markets.”

Taylor also impressed Trump after an hour-long meeting at the White House earlier this month, several people familiar with the matter said.

The president has said privately at least twice in the last week that he’s ruled out appointing Cohn to the job, according to two people who heard the information directly from Trump. He’s told advisers that Cohn is doing a great job in his current role and that he wants to keep him at the White House through congressional consideration of his proposed tax overhaul, according to another person.

Warsh, meanwhile, lacks support from Mnuchin, according to two other people familiar with the process, though they would not say why. His tenure on the Fed board has been criticised by a diverse group of economists ranging from Scott Sumner to Nobel laureate Paul Krugman.

And his consideration for the top post has rekindled a feud with Randal Quarles, who was confirmed as a Fed governor and vice-chairman for supervision earlier this month, people familiar with the matter said. Mnuchin was aware of Quarles’s concerns about Warsh, the people said.