Amid tensions with Powell, Donald Trump considers early Fed chair announcement to shift tone

President Donald Trump is considering naming a successor to Federal Reserve Chair Jerome Powell well ahead of the end of Powell’s term, a move that would mark a significant departure from tradition and could allow the administration to shape investor expectations around monetary policy. This development was reported by The Wall Street Journal on June 25.

According to the report, Trump has discussed announcing his choice by September or October, with some aides suggesting an even earlier timeline. The candidates under consideration include former Fed governor Kevin Warsh, National Economic Council director Kevin Hassett, Treasury Secretary Scott Bessent, former World Bank President David Malpass, and Fed governor Christopher Waller.

Powell’s term extends for another 11 months, but an early announcement would give the incoming nominee time to influence discourse around interest rates. As noted by The Wall Street Journal, Trump’s dissatisfaction with the Fed’s measured approach to rate cuts has prompted him to consider this unorthodox move.

“The Administration is now laying the groundwork… to turbocharge economic, job, and investment growth,” White House spokesman Kush Desai said, emphasising the need for a monetary policy that supports the administration’s economic objectives.

At a press conference during the NATO summit, Trump indicated his intention to act sooner rather than later. “I know within three or four people who all I’m going to pick,” he said. “He goes out pretty soon, fortunately, because I think he’s terrible.”

Trump’s strategy reflects a broader desire to install a Fed chair who aligns with his pro-growth stance. However, as The Wall Street Journal highlights, the challenge lies in securing someone who is both loyal to the president’s agenda and capable of influencing the broader rate-setting committee, over which the president holds limited direct sway.

Warsh, seen as a top-tier candidate, has voiced skepticism about low interest rates and stressed the importance of speaking candidly. “If the president wants someone who is weak, I don’t think I’m going to get the job,” he said in private remarks obtained by the Journal.

Meanwhile, Bessent’s ability to manage complex economic rollouts and his standing on Wall Street have made him a viable contender, despite public statements affirming his commitment to his current role.

Fed governor Waller has garnered attention for advocating an imminent rate cut, a position that may enhance his appeal to the White House. Still, as The Wall Street Journal notes, his relative anonymity to Trump may limit his prospects.

The approach is not without risks. Early nomination could expose the nominee to criticism from within the Fed and financial markets, potentially undermining their credibility. “The earlier Trump names his pick, the bigger the bull’s-eye on that person’s back,” said economist Douglas Rediker.

Chair Powell has maintained that the Fed’s decisions remain insulated from political influence. “All I want to do in what’s left of my time at the Fed is to have the economy be strong and have inflation be under control,” he told Congress this week.