🚀 Treasury Secretary dismisses Powell's dismissal and opens succession process
In response to rumors of interference in the Federal Reserve, the Treasury assures that Jerome Powell will remain in office until the end of his term and has already initiated formalities to choose his successor.
🌐 Political context
Throughout 2024, President Trump criticized interest rates and signaled discontent with some actions of the Fed, generating speculation about a possible dismissal of Powell before May 2026. The Treasury Secretary clarified that there is no intention to remove the Fed chairman, reaffirming the commitment to the institution's independence.
📋 Succession process
An internal task force is already gathering names of economists, members of Congress, and market leaders to compile a list of potential nominees. Formal consultations will be held with senators and experts, and confirmation hearings in the Senate are expected to occur a few months before the end of Powell's term.
📊 Implications for monetary policy
Powell's continuity ensures stability for the current near-zero interest rate policies and ongoing stimulus programs. This reduces the risk of abrupt changes in the strategy to combat inflation and support economic recovery.
🔍 Market reaction
Shortly after the announcement, S&P 500 futures recorded a moderate increase, and the dollar weakened against major currencies, reflecting relief at maintaining predictability in the Fed's leadership.
⚠️ Risks and challenges
Despite the positive signaling, the process of selecting a new chairman may generate volatility if names closely aligned with the government are raised. Meanwhile, the debate over the debt ceiling and upcoming inflation indicators in the US will remain on investors' radar until the position is renewed.