President Donald Trump is considering announcing his replacement for Federal Reserve Chair Jerome Powell as early as September, a move that would undermine Powell's authority months before his term expires in May 2026, according to people familiar with the matter.
The unusual timing reflects Trump's mounting frustration with Powell's cautious approach to interest rate cuts, and markets responded swiftly to the prospect of a more dovish Fed chair, with the dollar falling and stocks rising.
Trump told reporters Wednesday that he has narrowed his selection to "three or four people," calling Powell "terrible" without naming potential successors12. According to The Wall Street Journal, Trump is considering former Fed governor Kevin Warsh and National Economic Council director Kevin Hassett, while Treasury Secretary Scott Bessent is being pitched as a candidate by allies34.
Other contenders include former World Bank President David Malpass and Fed governor Christopher Waller, though reports suggest Waller's recent vote to maintain current interest rates has diminished his standing with the administration5.
The president's ire toward Powell could prompt an announcement "sometime this summer," one person familiar with the matter told the Journal4.
Financial markets interpreted the news as a signal that rate cuts may come sooner than expected. The US Dollar Index fell to 97, down 11% year-to-date, while the 10-year Treasury yield dropped to around 4.26%12. Stock markets climbed, with the S&P 500 approaching its first record close since February2.
"I think it is clear that Trump will choose a Chair who supports his policy goals, leading markets to interpret the news as dovish," Aaron Hill, chief market analyst at FP Markets, wrote Thursday1.
Markets are now pricing in a 90% chance the Fed will cut rates at least twice by year-end, according to the CME FedWatch tool1.
The potential early announcement represents an escalation in Trump's public campaign against Powell, whom he has repeatedly called "dumb" and "hardheaded" on social media12. Trump has demanded rate cuts despite inflation running at 2.4% in May, above the Fed's 2% target2.
Powell has resisted pressure to cut rates, citing concerns that Trump's tariff policies could fuel inflation. The Fed chair told lawmakers this week that tariffs create a "highly uncertain" economic path2.
"Mr Powell has repeatedly warned that the Trump administration's tariff plans will stoke inflation while boosting uncertainty," David Morrison, a senior market analyst at Trade Nation, noted3.
