ALSO READDonald Trump may name Jerome Powell as next Fed Chair: Bloomberg Donald Trump leaning towards Powell as next Fed chair Trump's fed chair choice down to Powell, Taylor: Source Trump considers Fed's Jerome Powell, economist Taylor to lead central bank Will Yellen remain Fed chair? Trump to decide by early Nov; 5 names in fray
Trump is expected to announce his choice on Thursday, a White House official said separately.
Powell, Yellen and Stanford University economist John Taylor are among those on the Republican president's short list.
By picking Powell, a Fed governor since 2012, Trump would get a combination of a change in leadership with the continuity offered by somebody who has been a part of the Yellen-run Fed that has kept the economy and markets steady in recent years.
Powell, 64, has supported Yellen's general direction in setting monetary policy, and in recent years has shared her concerns that weak inflation justified a continued cautious approach to raising rates.
The main challenger is Taylor, a favorite of conservative Republicans who want the central bank to rely more on rules when setting interest rates.
Critics say that a Taylor-run Fed would run the risk of tightening policy too fast and choking off the recovery from the 2007-2009 financial crisis and recession.
The Fed is expected to leave rates unchanged at the conclusion of its latest two-day policy meeting on Wednesday.