Powell's Exit Could Be Soon, As Bessent Suggests 'A Formal Process Is Already Starting'

After months of heated debate, it seems like the "Shadow Chair" is really coming.

Treasury Secretary Bessent made his first explicit statement confirming that the selection process for the next Federal Reserve Chair has officially begun. In a media interview on Tuesday, he said: “There’s a formal process that’s already starting, and there are a lot of good candidates inside and outside the Federal Reserve.”

Bessent emphasized that “it’s President Trump’s decision, and it will move at his speed,” adding that he would be involved in the decision-making process regarding the next Fed Chair.

Powell’s Fate Isn’t Just About the Chair—It’s About Market Stability

Bessent also stressed that Fed Chairs typically resign from their Board of Governors positions upon stepping down, casting doubt on whether Powell would retain any role at the Fed.

He also addressed concerns about a "shadow Fed Chair," saying: “There’s 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’d be very confusing for the market for a former Fed chair to stay on also.”  

This suggests that once a leadership change occurs, Powell may exit the Fed entirely to avoid institutional awkwardness where the new Chair’s decisions could be "influenced by the predecessor."

Who Will Be the Next Fed Chair?

The selection process for Trump’s next Fed Chair candidate remains fluid, with Hassett emerging as a leading contender.

The 63-year-old Hassett currently heads the National Economic Council and served as a key economic advisor during Trump’s first term. He is among at least four candidates Trump is considering—individuals seen as more willing than current Chair Powell to cooperate with the President’s push for interest rate cuts.

Besides Hassett, former Fed Governor Kevin Warsh is also a strong candidate. Meanwhile, rumors suggest Bessent himself may be eyeing the Fed Chair role while remaining Treasury Secretary, with some even claiming Trump once floated the idea of him holding both positions.