Bessent says formal process to pick US Fed chair has begun
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The news: US Treasury Secretary Scott Bessent said that the process to select the next head of the Federal Reserve is under way, adding that current chair Jerome Powell should also step down from the board when he is replaced.
The context: Speaking to Bloomberg Television on Tuesday, Bessent said: “There’s a formal process that’s already starting,” adding that it is “President Trump’s decision and it’ll move at his speed.”
Bessent said that the Fed chair also “traditionally” steps down as a governor when replaced, and that there has “been a lot of talk of a shadow Fed chair causing confusion in advance of his or her nomination, and I can tell you, I think it would be very confusing for the market for a former Fed chair to stay on also.”
Bessent added that Trump is not looking to fire Jerome Powell from his position prior to his term as Fed chair ending in May 2026. Powell’s term as a Fed governor doesn’t end until January 2028, which means it could be possible for him to remain at the central bank and participate in monetary policymaking until January 2028.
Trump and his administration have been campaigning for Powell to resign from his post, criticising his decisions to not cut interest rates. Trump also called for Powell's resignation over allegations from administration officials that Powell misled lawmakers about renovations at the Fed’s headquarters, including Federal Housing Finance Agency head Bill Pulte, who called Powell’s testimony “deceptive”.
Yesterday, Powell asked the central bank’s inspector general, Michael Horowitz, to review the costs of the Fed’s USD2.5 billion ($3.82 billion) headquarters renovation project, amid growing criticism from Trump administration officials.
Earlier on Tuesday, JP Morgan CEO Jamie Dimon warned against the Trump administration’s attacks on Fed chair Jerome Powell, describing the central bank’s independence as “incredibly important.”
“Playing around with the Fed could have adverse consequences, the absolute opposite of what you might be hoping for,” Dimon told media members in a call after the bank’s earnings announcement. “It is important that they be independent.”
