Federal Reserve Transition Begins Powell's Successor Search Underway

Treasury Secretary Scott Bessent has confirmed that the process to replace Jerome Powell as the chair of the Federal Reserve has begun. In an interview, Bessent stated that there is a formal process already underway to find Powell’s successor, whose term expires in 2026. This marks the first public acknowledgment of the transition plans at the Fed. Bessent highlighted that there are numerous strong candidates both within and outside the Federal Reserve who could potentially take on the role.

Bessent also suggested that Powell should consider stepping down entirely from the Fed once his chairmanship ends. He argued that this move would help avoid market confusion and maintain stability. Traditionally, the Fed chair also steps down as a governor, and Bessent believes that having a former Fed chair remain on the board could create uncertainty. The White House aims to announce a nominee for the next Fed chair as early as October or November.

The Trump administration has been vocal about its desire for a central bank leader who aligns more closely with its preference for lower interest rates and a more accommodative stance. Trump has repeatedly called for Powell’s resignation, criticizing his refusal to lower rates more aggressively. The administration has accused Powell of mismanagement and excessive spending on a renovation project at the Fed’s headquarters, suggesting this could be grounds for removal. Senior administration officials, including Bill Pulte and Kevin Hassett, have also weighed in on the matter, with some discussing the possibility of firing Powell “for cause.”

Despite the pressure, Trump has stated that he will not fire Powell. Powell has requested an inspector general review of the renovation project and has reiterated his intention to serve out his term. Bessent, who has been floated as a potential candidate for the Fed chair, downplayed such speculation, emphasizing that he is part of the decision-making process and that there are many strong candidates to consider.

Other names mentioned as potential Fed chairs include Kevin Warsh, a former Fed governor known for his crisis management experience; Michelle Bowman, the current Fed vice chair; and Christopher Waller, a sitting Fed governor respected for his academic credentials and policy expertise. Bessent’s remarks have sparked discussions in financial markets about the future direction of Fed policy and the potential for a more dovish successor.