The Trump administration is gearing up to find a replacement for Federal Reserve Chairman Jerome Powell this fall, according to Treasury Secretary Scott Bessent. In an interview with CNBC, Bessent mentioned that there are several strong candidates being considered for the position.
Bessent emphasized that it is ultimately up to the Federal Reserve to make decisions regarding interest rates. However, he suggested that if the central bank does not cut interest rates soon, there may be a higher rate cut in September.
Despite the current low unemployment rate and inflation above the 2% target, Fed officials have been cautious about lowering interest rates until they are certain that the administration’s tariff policies will not lead to increased prices.
President Trump has been critical of Powell, whom he appointed during his first term in office, and has even called for his resignation. While the president cannot directly dismiss Powell over policy disagreements, he has expressed his dissatisfaction with the current Fed leadership.
The administration believes that the recent tax legislation passed by Congress will stimulate private sector investment and strengthen the US economy. They argue that while tariff increases may temporarily raise prices, they should not have a long-term impact on inflation.
Bessent pointed out that the tariffs imposed by Trump since taking office have not significantly contributed to inflation thus far. He cited a market recovery following a 15% decline in April, which occurred after the announcement of higher tariffs against US trading partners.
According to Bessent, based on historical Fed models, interest rates are currently considered high. Delaying rate cuts could necessitate larger cuts in the future, increasing the risk of economic instability.
Regarding the possibility of holding both the Treasury and Fed chair roles simultaneously, Bessent acknowledged that it has not been done since the 1930s. However, he did not completely rule out the idea, stating that he is content in his current position.
The Federal Reserve Act specifies that Board members must dedicate their full time to the Board’s business, indicating that serving in two roles simultaneously may not be feasible.
In other news, Trump recently appointed Secretary of State Marco Rubio as his national security adviser, a dual role that has not been seen since Henry Kissinger in the 1970s.
Bessent mentioned that the administration will focus on nominating a new Fed chair to succeed Powell in the coming months. He expressed confidence in the president’s ability to handle various deals and negotiations, indicating that more attention will be given to the Fed chair selection after Labor Day.
