It appears increasingly likely that Federal Reserve Chair Jerome Powell will not remain in his role in the Trump administration, as discussions around a possible successor begin to take shape and political pressure mounts.
“Traditionally, the Fed chair also steps down as a governor,” U.S. Treasury Secretary Scott Bessent told Bloomberg Television on Tuesday morning. “There’s been a lot of talk of a shadow Fed chair causing confusion in advance of his or her nomination.
“And I can tell you, I think it’d be very confusing for the market for a former Fed chair to stay on also.”
Trump administration officials reportedly have talked about publicly naming the next nominee to be the 2026 successor to Powell by September as a way to pressure Powell into an early resignation.
There are also calls from administration officials and Republican lawmakers to resign, if not be fired for an alleged mishandling of cost overruns on Treasury headquarters renovations.
Powell, even if replaced as chair when his term officially expires next spring, does not have to fully resign from the Federal Reserve Board, but that has been customary for former chairs, Bessent noted.
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“There are a lot of great candidates, and we’ll see how rapidly it progresses,” Bessent said.
Bessent and Trump’s National Economic Council Director Kevin Hassett are among the leading candidates to be the next Fed chair nominee.
Hassett has intimated Trump might be justified in outright firing Powell, not for being “too late” on economic policy and interest rates reductions, but for the Treasury HQ mishandling.
Powell has asked the U.S. central bank’s inspector general to review the costs involved in the renovation of its historic headquarters in Washington, as Trump administration officials intensify their criticism of how the Fed is being run.
“I have asked the Board’s IG to take a fresh look at the project,” Powell told Senate Banking Committee Chair Tim Scott and the panel’s top Democrat, Elizabeth Warren, in a letter dated Monday and viewed by Reuters.
In material posted to its website on Friday and summarized in Powell’s letter to the senators, the Fed said the cost overruns were driven by factors including higher-than-estimated materials and labor costs, as well as toxic contamination in the soil that came to light during what is a complete rehabilitation of the nearly 100-year-old Marriner S. Eccles building and a neighboring property on Constitution Avenue in the nation’s capital.
“We respect the critical importance of the constitutionally derived congressional oversight of our activities, and we are committed to working collaboratively and cooperatively with you,” Powell wrote to the senators.
Powell, who was nominated by Trump in late 2017 to lead the Fed and then nominated for a second term by Democrat President Joe Biden four years later, has said he intends to serve out his term as Fed chief, which ends May 15.
Trump has rebuked Powell’s hiring at the recommendation of first Trump administration Treasury Secretary Steven Mnuchin, who Trump did not bring back.
Information from Reuters was used to compile this report.
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