While President Donald Trump and his advisors begin to consider replacements for the president of the Federal Reserve, Jerome Powell, They are running with an important complication: it is not clear if Powell will leave the US central bank next year.
While Trump has sometimes speculated on Powell’s dismissal, a ruling from the May Supreme Court increased the obstacle to it, without having a legal “cause”.
The pressure on Powell intensified even more on Wednesday, when Trump’s housing financing director Bill Ablicte accused him of deceiving legislators about the renovations of the Federal Reserve buildings. About said the matter was enough to dismiss it “with just cause”, and the president later published on social networks that Powell “should resign immediately.”
The head of the Federal Reserve has repeatedly refused to say whether he will resign when his four -year mandate as president expires in May, or will remain at the Federal Reserve Board, something he could technically do until his mandate as governor expires in January 2028. The perspective that Powell remains in the Central Bank has led administration officials to start planning multiple scenarios for replacement, since Trump seeks a president who supports his economic agenda.
The president declared on Tuesday that he has “two or three main candidates” to happen to Powell, but refused to reveal his names. In recent weeks, Trump’s advisors have even talked with him about the possibility that Scott Besent could perform simultaneously as secretary of the Treasury and president of the Federal Reserve, according to people familiar with the matter. Such decision would be unpublished since both charges separated in 1935, in legislation aimed at granting the Federal Reserve some independence.
“Any information that suggests that the president is considering that Secretary Bestént simultaneously occupies the positions of Secretary of the Treasury and president of the Federal Reserve is totally false,” said a White House official. A treasure spokesman did not respond to a request for comments.
As the selection of the new leader of the Federal Reserve develops, the president has made it clear that the next president must be “someone who wants to cut the fees.” Powell has led his colleagues to stand firm this year, stating that they need more certainty that Trump’s tariffs will not trigger a persistent increase in inflation.
When on Tuesday they asked about his mandate in a discussion panel with central bankers around the world, Powell said: “I have nothing to tell them about it.”
Powell’s circumspection has frustrated some of Trump’s advisors, who take silence as an attempt to counteract the president’s desire to have more influence on monetary policy, according to people familiar with the matter.
If I remained as governor of the Federal Reserve, Powell would leave Trump with only a scheduled opportunity to fill a position at the Board (that of Governor Adriana Kugler, whose mandate ends in January) until the last year of the president in office.
Besent, publicly recognizing that Powell could stay, he said Monday in an interview with Bloomberg TV that an idea would be to take Kugler’s position with the person who would later be promoted to the presidency. Choosing a governor in exercise is another option, he added.
Powell’s shyness has raised speculation about his possible permanence in the Board of Directors if Trump chooses a candidate excessively deficient to the president’s demands, according to Neil Dutta, director of Economic Research of Renaissance Macro. “That is the advantage that Powell has right now by not declaring his intentions.”
The pressure increases
The tense political environment surrounding the US Central Bank makes the next decision about its presidency even more delicate than usual. Normally, Fed presidents withdraw from the Central Bank at the end of their mandate, but the political context has rarely been as tense as the current one.
In February, Governor Michael Barr resigned as vice president of supervision, although he remained at the Board, which limited Trump’s options to restructure it. “The independence of the Federal Reserve is essential to comply with our legal mandates,” Barr emphasized that month.
Christopher Waller, an exercise governor who was nominated by Trump for the Fed Board of Directors during his first mandate, is an option for the president’s post. Kevin Hasett, director of the National Economic Council of the White House, and former Fed Kevin Warsh official are also main candidates outside the Fed, according to sources familiar with the matter. The former president of the World Bank, David Malpass, has also been mentioned.
