Tensions between Donald Trump and Federal Reserve Chair Jerome Powell are escalating amid discussions of a possible replacement for the Fed chair.
Who is the Next Fed Chair?
Trump has not officially named his pick for the Fed chair position, but he noted at a NATO summit press conference that he has narrowed it down to 'three or four people.' Among the top contenders are known Trump loyalists: Kevin Warsh, Kevin Hassett, Chris Waller, and David Malpass. Scott Bessent is also being considered as a strong candidate supportive of expedited economic reforms, including faster interest rate cuts.
Can Trump Fire Jerome Powell?
Although Trump has hinted at firing Powell, it's not that straightforward. A recent Supreme Court ruling confirmed that the Fed operates differently from other government agencies, securing Powell's position. During his first term, Trump contemplated removing Powell but backed off after unfavorable market reactions. This time, he has been more open about the possibility of a leadership change.
Battle Over Fed Interest Rates
The disagreement between Trump and Powell mainly revolves around interest rates and inflation. Trump wants the Fed to cut rates to help stimulate economic growth, whereas Powell maintains a cautious stance, warning that Trump's tariff policies could increase prices. With only 11 months left in Powell's term, the decision on the next Fed chair could significantly impact the U.S. economy.
Trump seeks changes at the top of the Fed, but legal obstacles and market reactions could complicate his moves.
