Trump Considers Replacing Powell as fed Chair, Fueling Rate Cut Speculation
the US financial landscape is bracing for potential upheaval following Treasury Secretary Scott Besent’s suggestion that President Donald Trump may appoint a new Federal Reserve chair by Christmas. This move comes amidst months of public criticism from Trump towards current Chair Jerome Powell,whom he accuses of unnecessarily raising interest rates.
Tensions reached a peak last week at the US-Saudi Investment Forum, where Trump publicly questioned Powell’s “mental problems” and expressed a desire to remove him. He also directly warned Besent to address high interest rates,stating,”If you don’t fix this quickly,I’ll fire you,okay?” Besent attempted to downplay the President’s remarks to CNBC,calling them a “joke” and acknowledging the complexities of monetary policy.
Hassett Emerges as Frontrunner
According to Bloomberg reports, kevin Hassett, director of the White House National Economic Council, is considered the leading candidate to replace Powell, whose term expires in May 2026. Hassett aligns with Trump’s desire for immediate rate cuts, stating on November 20th that he “would cut interest rates now” based on current economic data, and criticizing central banks for losing control of inflation.
Fed Divided on Next Steps
This potential leadership change occurs as the Federal Reserve itself is internally divided on future interest rate policy. The fed has already implemented two successive quarter-point cuts, bringing the target range to 3.75% – 4%.
Market sentiment leans towards further easing, with traders assigning an 83% probability to a quarter-point cut at the December 10th meeting, following comments from New York Fed President John Williams suggesting room for “further adjustment.”
However, presidents of the Federal Reserve Banks of Dallas (lori Logan) and Boston (Susan Collins) advocate for maintaining current rates “for a period of time,” believing a restrictive policy remains appropriate.
This internal conflict leaves the market in a precarious position, awaiting either a Trump appointment favoring immediate cuts or a decision from Powell under significant pressure as the Christmas holiday approaches.