Possible resignation of Powell: the intrigue intensifies.
Donald Trump is once again bringing the Fed topic to the forefront. At the center is the current chairman Jerome Powell. His term expires in May 2026. Two years remain. But in Washington, discussions about a replacement are already underway.
Media reports: The White House is considering the candidacy of Treasury Secretary Scott Bessent. He could head the Fed if Trump succeeds in changing the leadership.
The White House is in a hurry. Trump has his own logic.
The Federal Reserve is a key lever for managing the U.S. economy. Control over it provides enormous influence.
Bloomberg reports: discussions within Trump's team are in full swing. Bessent is not a random figure. He is close to Trump and could become a convenient successor to Powell.
Planning ahead is a reasonable step. The appointment may take place in May 2026, when the current term expires. However, as sources note, Trump's team wants to have room for maneuver before that date.
There is another scenario. Trump has repeatedly threatened to remove Powell early. Formally, the president does not have such powers, but a legal battle is possible.
Difficulties with early dismissal: The Supreme Court has already intervened.
The legal side of the issue is extremely complicated. In May, the U.S. Supreme Court allowed the president to dismiss certain federal officials. However, the Fed chair is not among them. The court emphasized: the Fed is a unique structure with a special legal status.
The legal attack on Powell will set a precedent. It will inevitably affect financial markets. Investors may start to withdraw capital from U.S. markets.
There are several candidates for replacement — Trump has options.
Scott Bessent is not the only candidate. Among the figures being considered:
Kevin Hassett. Heads the National Economic Council of the White House.
Christopher Waller. Member of the Board of Governors of the Fed.
David Malpass. Former head of the World Bank.
Each of them has their own support and experience. Everything will depend on the final strategy of the White House. If the change occurs on schedule, a decision will be made by the summer of 2026. If not, personnel changes may begin in the coming months.
What lies behind Trump's pressure?
The interest rate remains high. The Fed is delaying its reduction despite growing pressure from the White House.
Trump publicly criticizes Powell. He accuses the head of the regulator of being overly cautious. According to Trump, the Fed's current policy hinders economic growth and the stock market. The closer the elections get, the louder the accusations become.
What's next?
The staffing issue at the Fed is turning into a full-blown political intrigue. The 2024 elections directly affect the future of U.S. monetary policy.
If Trump manages to secure a second term, Powell's replacement is almost guaranteed. This means that the course of American interest rate policy could change significantly in the coming years.
For the market, this is not just a change of name in the Fed chair's seat. It is a potential turnaround of the entire financial strategy of the country.
