The confrontation between President Donald Trump and Federal Reserve Chairman Jerome Powell is becoming increasingly tense as inflationary pressures rise.

While Trump continuously criticizes and suggests firing Powell, Treasury Secretary Scott Bessent recently called for Powell to completely step down after his term ends in May 2026 to avoid market chaos.

MAIN CONTENT

  • Scott Bessent recommends that Powell not continue as a member of the Fed Board after his Chair term ends.

  • The search for a successor to the Fed Chairman has been initiated with several candidates from inside and outside the Fed.

  • U.S. inflation rises to 2.7%, putting pressure on the Fed, but long-term trends should be observed rather than reacting to single data points.

Bessent asserts that Powell should completely step down from the Fed after his term.

Treasury Secretary Scott Bessent emphasizes that the Fed Chairman should completely step down after their term to ensure transparency and avoid confusing the markets. This view is based on tradition and aims to maintain the Fed's credibility in the eyes of the public and investors.

The Treasury Secretary said: "The Fed Chairman should completely step down at the end of their term to avoid complicating the market" (Scott Bessent, 2024).

Scott Bessent, U.S. Treasury Secretary, 2024

There are rumors that President Donald Trump is considering a 'shadow chairman' model operating externally to influence the Fed's decision-making while Powell remains in office, raising concerns about monetary policy stability.

Who will succeed the Fed Chairman?

According to Bessent, the process of selecting a new Fed Chairman has officially begun. The White House is considering several candidates, including those from within the Fed and external personnel. The final decision will be made by Trump according to his plans.

The financial market and the public are closely monitoring since the person holding the Fed Chair position will significantly influence U.S. monetary and economic policy in the coming years.

How does the CPI inflation rise to 2.7% pressure the Fed?

The latest Consumer Price Index (CPI) report shows inflation rising to 2.7%, higher than forecasted and the first time in 5 months that inflation has exceeded expectations. This puts significant pressure on the Federal Reserve to adjust its interest rate policy.

Bessent warns not to panic too much over individual CPI data but rather assess the long-term inflation trend for a more comprehensive view.

"Focusing on individual inflation metrics can be misleading; it’s important to look at the overall long-term trend," Bessent emphasized (2024).

Scott Bessent, U.S. Treasury Secretary, 2024

Comparing inflationary pressures and Fed policies past and present

Year CPI (%) Interest Rate Policy Market Reaction 2020 1.4 Emergency rate cuts Stabilized after COVID-19 volatility 2023 3.5 Rate hikes to control inflation High market volatility 2024 (current) 2.7 Expected to maintain or slightly increase interest rates Cautious investors, closely monitoring

Frequently Asked Questions

Can Powell continue as a Fed member after his Chair term?

According to Treasury Secretary Scott Bessent, Powell should step down completely to avoid confusion and maintain transparency in monetary policy.

How is the process of selecting a new Fed Chairman going?

Starting with many candidates from inside and outside the Fed, the final decision will be based on the choice of the President of the United States according to the current process.

Will 2.7% inflation negatively impact the economy?

Rising inflation creates pressure for interest rate hikes, but long-term trends should be observed instead of reacting to individual CPI reports.

How does Trump's criticism of Powell affect the Fed?

Political pressure increases the market's sensitivity to monetary policy moves and creates temporary instability.

Source: https://tintucbitcoin.com/powell-het-nhiem-ky-bo-truong-keu-tu-chuc/

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