Trump Considers Federal Reserve Chair Replacement as Powell Term Approaches End

• Trump plans to replace Fed Chair Jerome Powell when his term ends in May 2026. 

• The president wants someone who will cut interest rates aggressively instead of keeping them steady. 

• Top candidates include Treasury Secretary Scott Bessent and former Fed governor Kevin Warsh.

President Donald Trump is exploring potential replacements for Federal Reserve Chairman Jerome Powell ahead of his term expiration in May 2026. Multiple sources indicate Trump is considering Treasury Secretary Scott Bessent, former Fed governor Kevin Warsh, National Economic Council director Kevin Hassett, and Fed governor Christopher Waller among top contenders.

The president has intensified criticism of Powell’s monetary policy decisions, particularly the Fed’s reluctance to cut interest rates aggressively. Trump has urged Powell to slash interest rates by a full percentage point, while the Fed maintains the federal funds rate at its current range of 4.25% to 4.5%.

Mounting Pressure on Current Fed Leadership

Trump’s public attacks on Powell over interest rates have escalated, with Vice President JD Vance and Commerce Secretary Howard Lutnick also targeting the Fed chairman. The administration’s push for monetary easing comes as economic data shows mixed signals about the need for rate cuts.

Recent reports indicate Trump claimed “we have no inflation,” though the US had an annual inflation rate of 2.4% in May. Powell has maintained that Fed rate cuts remain on hold despite Trump’s demands for reductions.

The Federal Reserve’s independence has become a central issue in this dispute. Under current law, presidents may not fire or demote the Fed chair, and Powell’s term as Fed chair ends May 15, 2026.

Early Replacement Strategy Under Consideration

Reports suggest Trump may consider naming a “shadow” Fed chair before Powell’s term expires, a proposal originally floated by Scott Bessent before he became Treasury secretary. This unprecedented move could undermine the current Fed leadership and create uncertainty in financial markets.

Bloomberg reported that Trump is considering nominating Bessent to replace Powell, citing his economic expertise and strong understanding of Wall Street. Former Fed official Kevin Warsh, who Trump previously considered for the Treasury secretary role, also remains on the Fed chair position’s shortlist.

The timing of any announcement remains unclear. Trump has only two certain Fed board vacancies to fill during his term – Powell’s seat and another by Governor Adriana Kugler. The president’s approach to Fed leadership selection will likely influence monetary policy expectations and market conditions throughout 2025 and 2026.

Financial markets monitor developments between the White House and the Federal Reserve as both sides maintain their positions on appropriate interest rate policy for the current economic environment.