Bloomberg reports on FED Powell

Bloomberg reports on FED Powell

The future of Federal Reserve Chair Jerome Powell remains uncertain as U.S. Treasury Secretary Scott Bessent confirmed that a formal process to identify his successor has begun. In an interview with Bloomberg Television on Tuesday, Bessent suggested that it would be confusing for Powell to remain at the Fed after his term as chair ends in May 2026 [1].

Powell's term as a Fed governor doesn't end until January 2028, allowing him to stay on and participate in monetary policymaking even after his tenure as chair expires. However, Bessent emphasized that the market might find it confusing if Powell continued to serve as a governor, and that the process to identify his successor is already underway [1].

The Treasury Secretary also noted that there are many good candidates both inside and outside the Federal Reserve for the position. He stated that the decision-making process is President Trump's, and that it will move at his speed [1].

Bessent's comments came as Trump has been vocal about his desire for a successor who favors lowering interest rates. The President has repeatedly criticized Powell for not cutting rates, despite the Fed's concerns about the potential impact of Trump's tariffs on inflation [1].

The latest inflation data is expected to be released on Tuesday morning, which could influence the ongoing discussion about the Fed's monetary policy. Bessent, however, advised against placing too much emphasis on a single number, pointing to the recent trend of inflation numbers that have not substantiated fears of a substantial price level rise [1].

Meanwhile, top Wall Street CEOs have emphasized the importance of an independent Federal Reserve in the face of the ongoing saga between Trump and Powell. Bank of America's Brian Moynihan, Goldman Sachs' David Solomon, and JPMorgan Chase's Jamie Dimon all stressed the Fed's autonomy, which is critical for the credibility of the central bank and the effectiveness of capital markets [3].

The Supreme Court earlier this year ruled that the Fed Chair can only be removed "for cause," such as malfeasance or dereliction of duty. This has added a layer of complexity to the potential removal of Powell [4]. Trump has denied reports that he is attempting to fire Powell, but has not ruled out the possibility if there is evidence of fraud [4].

In the meantime, the financial markets have reacted to the ongoing discussion. Treasury yields dropped after Bessent's remarks, with two-year yields hitting a session high of 3.92% [1]. The Bloomberg Dollar Spot Index was little changed as of 7:55 a.m. in New York [1].

The process to identify Powell's successor is expected to move forward in the coming months, with one potential timeline having a Fed chair name emerge in October or November [1]. The decision to appoint a new Fed chair will ultimately be made by President Trump, with the process moving at his speed [1].

References:
[1] https://www.bloomberg.com/news/articles/2025-07-15/bessent-says-formal-process-for-powell-succcessor-has-started
[2] https://www.reuters.com/business/finance/us-treasury-secretary-bessent-says-formal-process-powell-successor-has-started-2025-07-15/
[3] https://www.bloomberg.com/news/articles/2025-07-16/wall-street-ceos-stress-fed-independence-as-powell-attacks-grow
[4] https://www.localnewslive.com/2025/07/16/pres-trump-may-not-fire-fed-chair-powell/