Trump Eyes Powell Replacement: Fed Chair Drama Shakes Markets as Rate Cut Debate Heats Up

Key Points

• It seems likely that President Trump is intensifying his conflict with Federal Reserve Chair Jerome Powell, considering a replacement before Powell's term ends in May 2026.

• Research suggests Trump has a shortlist of candidates, including Kevin Warsh and Scott Bessent, and may announce a "shadow chair" to signal future policy shifts.

• There is controversy around the legality and impact of replacing Powell early, with the White House stating no decision is imminent as of June 28, 2025.

Background

President Donald Trump has been vocal about his dissatisfaction with Jerome Powell, the current Federal Reserve Chair, particularly over interest rate policies. This week, Trump has continued to pressure Powell, suggesting he should resign and hinting at naming a successor soon, creating a "dueling" dynamic between the current chair and potential replacements.

Trump's Actions

Trump has criticized Powell publicly, calling him names like "stupid" and demanding rate cuts, which the Fed has resisted due to inflation concerns. Reports indicate Trump is considering announcing a replacement early, possibly as a "shadow chair," to influence future monetary policy, though the White House has clarified no decision is imminent

.

Potential Successors

Potential candidates include:

• Kevin Warsh, a former Fed governor known for hawkish views.

• Scott Bessent, current Treasury Secretary, often seen as a front-runner.

• Kevin Hassett, National Economic Council Director, a close Trump ally.

• Christopher Waller, current Fed governor advocating lower rates.

• David Malpass, former World Bank President, with international finance experience.

This situation highlights the tension between Trump's economic agenda and the Fed's independence, with markets reacting to the uncertainty.

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A Comprehensive Analysis of "This Week in Trumponomics: Dueling Fed Chairs"

As of June 28, 2025, the economic landscape under President Donald Trump's administration, often referred to as "Trumponomics," is marked by significant tension with Federal Reserve Chair Jerome Powell, culminating in what has been described as "dueling Fed chairs." This note provides a detailed examination of the current conflict, Trump's actions, potential successors, and the implications for monetary policy and market stability.

Context and Timeline

Jerome Powell has been the Chair of the Federal Reserve since February 2018, with his current term set to end in May 2026. However, recent developments indicate that President Trump is dissatisfied with Powell's leadership, particularly regarding interest rate policies, and is considering announcing a successor earlier than expected. This week, on June 27, 2025, Trump continued his assault on Powell, suggesting he would like him to resign, as reported by The New York Times. This move is seen as part of Trump's broader strategy to influence monetary policy, with reports suggesting he may name a "shadow chair" to signal future policy shifts, as noted in Yahoo Finance.

The White House, however, has clarified that no decision is imminent, with statements on June 26, 2025, indicating that while Trump has the right to change his mind, no Federal Reserve chairman decisions are near, according to The Financial Times. This discrepancy between Trump's public statements and official communications has fueled debate about the legality and process of replacing Powell before his term ends, with some, like CNBC, questioning the feasibility of such actions.

Trump's Actions and the "Dueling" Dynamic

Trump's actions this week have intensified the conflict with Powell, creating a "dueling" scenario where Powell continues to lead the Fed, while Trump actively considers and discusses potential replacements. Key actions include:

• Public Criticism: Trump has ramped up his attacks on Powell, calling him "terrible," "very average mentally person," "low IQ," "very political guy," and "very stupid person" during a NATO summit news conference on June 27, 2025, as reported by CNBC. He has also suggested Powell should resign, though this is largely symbolic given Powell's term structure.

• Pressure for Rate Cuts: Trump has made clear he expects the next Fed chair to cut rates, stating on June 27, 2025, that he won't appoint anyone who doesn't back rate cuts, with a preference for rates at 1% compared to the current Fed benchmark of 4.25% to 4.50%, as noted by US News. This contrasts with Powell's cautious approach, holding off rate cuts since December 2024 due to inflation concerns, particularly from Trump's tariffs, which could add 1% or more to inflation, as mentioned in Business Insider.

• Consideration of Early Announcement: Reports indicate Trump is considering announcing his pick to succeed Powell earlier than expected, possibly as a "shadow chair," to influence interest rate policy. This was highlighted in The Wall Street Journal, with the idea being to signal a future shift toward a more dovish monetary policy. However, the Supreme Court quashed Trump's ability to fire Powell, as noted in Politico, limiting his direct influence.

This "dueling" dynamic is evident in the market's reaction, with Treasury yields and the dollar slipping on reports of potential early announcements, as reported by Business Insider, reflecting investor uncertainty.

Potential Successors

Trump has a shortlist of "three or four" candidates to replace Powell, though no finalists have been officially named. Based on recent analyses from Yahoo Finance and The Wall Street Journal, the following table summarizes the leading candidates, their backgrounds, and reasons for consideration:

Name	Position/Experience	Relevant Details
Kevin Warsh	Former Fed governor (2006-2011), Fellow at Hoover Institution, Lecturer at Stanford	Viewed as a favorite earlier in 2025, interviewed by Trump in 2017 and 2025, critical of Fed's credibility, hawkish on inflation
Kevin Hassett	National Economic Council Director	Close ally of Trump, mentioned as potential successor due to economic expertise
Scott Bessent	Treasury Secretary	Leading contender, aligns with administration's economic policies, though he has said he's not interested, which could change
David Malpass	Former World Bank president	Extensive international finance experience, mentioned as potential successor
Christopher Waller	Current Fed governor	Trump appointee, advocate for lower rates, offers continuity, familiar with Fed operations

Kevin Warsh and Scott Bessent stand out as frequent mentions, with Warsh's hawkish views aligning with some of Trump's preferences, while Bessent's role as Treasury Secretary positions him as a natural choice. Christopher Waller's advocacy for lower rates makes him a potential dovish candidate, contrasting with Powell's current stance.

Implications and Controversy

The "dueling Fed chairs" scenario has significant implications for monetary policy and market stability. An early announcement of a successor could undermine Powell's authority, potentially leading to market volatility, as noted in The New York Times. The controversy lies in the unprecedented nature of this move, with legal scholars debating whether Trump can force Powell out before his term, given the Fed's independence, as highlighted in CNBC. This tension underscores the political nature of the appointment, with Trump's desire for loyalty and influence over monetary policy at odds with the Fed's statutory autonomy.

Market reactions this week, such as the dollar sinking to a three-year low on reports of an early announcement, as reported by Fox Business, reflect investor concerns about policy uncertainty. Additionally, the Fed's decision-making process, with Governor Waller suggesting possible rate cuts as early as July, as noted in CNBC, adds complexity to the "dueling" dynamic.

Historical Context

Historically, Fed chairs have served multiple terms, with predecessors like Alan Greenspan (1987-2006) and William McChesney Martin (1951-1970) serving for extended periods. Powell's potential early replacement would mark a significant shift, reflecting the current administration's aggressive stance on economic policy. This context is detailed in [Wikipedia]([invalid url, do not cite]), which outlines the appointment process and the chair's role, though specific URLs are not cited here due to invalid references.

Conclusion

As of 09:30 AM PDT on Saturday, June 28, 2025, the "dueling Fed chairs" scenario is heating up, with Trump intensifying his conflict with Powell and considering potential successors like Kevin Warsh, Scott Bessent, and Christopher Waller. While Trump has been vocal about announcing a replacement soon, the White House has stated no decision is imminent, adding uncertainty. This situation reflects the ongoing tension between political influence and the Fed's independence, a dynamic that will likely shape economic discourse in the coming months, with significant implications for monetary policy and market stability.

Key Citations

• This week in Trumponomics: Dueling Fed chairs Yahoo Finance

• Trump's war against the Powell Fed has taken another political turn CNBC

• White House says pick to replace Fed's Powell not 'imminent' after Trump floats 3 or 4 options New York Post

• A look at who could replace Powell as Fed chair Yahoo Finance

• Trump Encourages Powell to Resign in Latest Attack on the Fed Chair New York Times

• Trump says he'll expect next Fed chair to cut rates Axios

• US dollar sinks to three-year low on report Trump planning early Fed Fox Business

• Trump Says Three or Four People on List to Replace Fed's Powell Bloomberg

• Trump Says He Won't Appoint Anyone to Fed Who Doesn't Back Rate Cuts US News

• White House says decision on nominating next Fed chair not imminent Financial Times

• Treasury Yields and the Dollar Slip As Trump Said to Mull Powell Replacement Business Insider

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