Trump Narrows Fed Chair Search Amid Powell Criticism

President Donald Trump’s search for a new Federal Reserve Chair has reportedly narrowed down to two prominent figures: former Fed Governor Kevin Warsh and National Economic Council Director Kevin Hassett. This development comes amidst escalating public criticism from Trump directed at the current Fed Chair, Jerome Powell. The administration’s accelerated selection process underscores the growing tension between the White House and the central bank, particularly over the issue of interest rates.

Trump’s dissatisfaction with Powell’s cautious, data-driven approach to monetary policy was evident during a recent NATO press briefing. The President openly criticized Powell’s performance, describing him as “very stupid” and “average mentally.” This public rebuke signals the administration’s intent to replace Powell with a more compliant figure at the earliest opportunity. The move to name a successor is part of a broader push by the administration to influence monetary policy, with figures like Commerce Secretary Howard Lutnick arguing that high tariff revenues have created favorable conditions for the Fed to lower rates and stimulate the economy.

According to recent statements, Trump has identified three or four potential replacements for Powell and expects to make a formal announcement by late summer or early fall. The leading contenders for the position are former Fed Governor Kevin Warsh and National Economic Council Director Kevin Hassett. Treasury Secretary Scott Bessent is also reportedly under consideration for the top job at the central bank. The early timeline for the selection process has fueled speculation that Trump may be attempting to create a “shadow Fed chair” to influence monetary policy ahead of a formal transition.

Despite the intense political pressure, prediction markets indicate a low probability that Powell will be removed from his post before his term ends. This reflects a general doubt about an imminent, forced leadership change at the Fed. Powell, for his part, has maintained a strictly data-driven and cautious approach to monetary policy. In recent Congressional testimony, he acknowledged that new tariffs might contribute to future inflation but noted that no significant price impact has yet materialized. Powell emphasized that the Fed’s decisions will be guided by a comprehensive assessment of economic conditions, leaving open the possibility of rate cuts later in 2025 only if there is a clear reduction in inflation or a significant weakening in the labor market. This stance stands in stark contrast to the administration’s public demands for immediate rate cuts.