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Trump's Plan to Replace Fed Chair Jerome Powell
Donald Trump is planning to replace Federal Reserve Chair Jerome Powell with Kevin Warsh, a former Fed governor, according to reports from Reuters. Trump expressed his dissatisfaction with Powell's handling of interest rates, calling for a full percentage point cut to lower borrowing costs.
Why Trump Wants Change
Trump believes Powell's cautious approach is hurting the country, citing the European Central Bank's recent rate cuts as an example of what the US should be doing. Despite strong jobs numbers, Trump remains adamant about cutting interest rates, arguing it would reduce debt costs and boost the economy.¹
Kevin Warsh: The Likely Successor
Warsh, who served as a Fed governor from 2006 to 2011, is viewed as a potential candidate who would be more responsive to Trump's direction. Trump praised Warsh, saying he's "very highly thought of". Warsh has stayed active in policy circles since leaving the Fed and has ties to both Republican administrations and Wall Street.²
Potential Impact
Markets currently see little chance of a rate cut at the next Federal Open Market Committee meeting. If Trump follows through with replacing Powell, it could have significant implications for the Fed's independence and monetary policy.
Key Points
- *Trump's Demands*: Full percentage point cut in interest rates
- *Reason*: Lower borrowing costs, boost economy
- *Potential Replacement*: Kevin Warsh, former Fed governor
- *Warsh's Background*: Fed governor from 2006-2011, ties to Republican circles and Wall Street
- *Market Expectations*: Little chance of rate cut at next Fed meeting
