Trump Considers Replacing Powell With Bessent Amid Fed Tensions

President Donald Trump is reportedly considering replacing Federal Reserve Chair Jerome Powell with Treasury Secretary Scott Bessent. This speculation comes amidst growing tensions between Trump and Powell, with the president expressing dissatisfaction over the Fed's monetary policy and interest rates. However, it is crucial to note that this information has not been confirmed.

Treasury Secretary Scott Bessent has acknowledged that a formal process to find Powell's replacement is already underway. He stated that while President Trump has no current plans to fire Powell, the administration is exploring options for his successor. Bessent emphasized the importance of central bank independence and suggested that Powell should step down from the Fed board when his term as chair ends. This move would align with the traditional practice where the Fed chair also steps down as a governor.

The speculation surrounding Powell's replacement has drawn attention from various quarters, including the financial sector. Jamie Dimon, CEO of JPMorgan Chase, warned against interfering with the Fed's independence, stating that such actions could have adverse consequences. Dimon's remarks underscore the significance of maintaining the Fed's autonomy in setting monetary policy.

The search for Powell's successor is part of a broader effort by the Trump administration to influence the Fed's policies. Trump has been critical of Powell for not lowering interest rates more aggressively, viewing it as a refusal to ease monetary policy for political and personal reasons. The administration's pressure on Powell has included questioning his management of a $2.5 billion renovation of the Fed's headquarters and whether he was truthful with Congress about the project.

National Economic Council Director Kevin Hassett has suggested that the legal authority to fire Powell before his term ends in May is being examined. However, Bessent's statements indicate that the administration is focusing on a formal process to find a replacement rather than immediate removal. The Treasury Secretary's involvement in the decision-making process has also raised questions about whether he could serve as both Treasury Secretary and Fed Chair simultaneously. Legal experts have noted that there is no prohibition preventing this dual role.

The uncertainty surrounding Powell's future and the potential appointment of Bessent as his successor has added to the ongoing debate about the Fed's independence and the role of the president in influencing monetary policy. As the formal process for finding Powell's replacement continues, the financial community and the public will be closely watching the developments and their potential impact on the economy.