No Early Exit For Jerome Powell: Bessent Confirms The Fed Chair Will 'Serve Out His Term'

Since the U.S. President-elect Trump nominated hedge fund giant Scott Bessent as the next Treasury Secretary last month, speculations about Federal Reserve Chairman Powell possibly being forced to step down early have been rampant.

On Tuesday , Bessent clearly stated in an interview that Powell could still complete his remaining term after the Trump administration takes office. This also reassured the market.

"Powell Will Serve Out His Term"

After Trump won the election, speculations about Powell's fate after Trump's victory last month have been increasing.

Although Trump has a tense relationship with Powell, last weekend, Trump already told the media that he might not try to remove the Federal Reserve Chairman.

"As the President said on Sunday, and I'm in complete agreement with him, that Jay Powell will serve out his term," Bessent said on Tuesday.

Bessent's remarks contrast with his previous proposal of a "shadow chair" for the Federal Reserve.

Before the election, Bessent had proposed the idea of a "shadow chairman" to take charge of the Federal Reserve. He said at the time that Trump could nominate the next Federal Reserve Chairman in advance, establish a shadow chairman, and provide the market with their own policy forward-looking information, thus marginalizing Powell's role, so "no one will care what Powell has to say."

 Market Is Focusing On Powell's Future

Last weekend, when Trump was asked if he would replace the Federal Reserve Chairman, he directly replied, "No, I don't think so."

When asked if he would ask Powell to step down, he replied, "No, I don't."

He also claimed that Powell might "be told" to step down, but not be asked to step down. However, Trump said he currently has no plans to do so.

In 2018, Trump chose Powell as the Federal Reserve Chairman, but their relationship deteriorated later in Trump's term. In 2022, President Biden reappointed Powell, which means his term as Federal Reserve Chairman will end in May 2026.

Last month, at the Federal Open Market Committee (FOMC) meeting, Powell stated that the U.S. President has no right to fire him, and he would not resign if Trump asked him to resign as Federal Reserve Chairman.