Bessent Confirms Trump Admin is Moving to Replace Fed Chair Powell

U.S. Treasury Secretary Scott Bessent has confirmed that a formal process is now underway to identify a successor to Federal Reserve Chair Jerome Powell. Speaking in Washington, Bessent noted that while Powell’s term ends in May 2026, the administration is already working on the transition “at the president’s pace.”

The comments come as President Trump intensifies pressure on Powell, whom he has frequently criticized for holding interest rates too high. The president has made clear he wants a Fed more aligned with his economic agenda, particularly one willing to cut rates more aggressively.

Bessent emphasized that the current process does not signal an early dismissal. “There is no shadow chair,” he said, adding that keeping a former chair on the Fed board after their term ends would confuse markets and undermine the credibility of any successor.

Trump Tightens Grip on Monetary Policy

The move to identify Powell’s replacement is being interpreted by markets as a clear effort to steer the central bank toward looser monetary policy. Trump has repeatedly called out Powell for being “stubborn” and “tone-deaf,” arguing that high rates are choking economic momentum and complicating debt servicing.

Despite Trump’s rhetoric, Bessent reiterated that the White House intends to follow normal procedures. Still, the effort to replace Powell well ahead of the end of his term marks a rare moment of transparency in how monetary leadership transitions are managed under political pressure.

Treasury markets showed little immediate reaction, a sign that investors believe the Fed’s core institutional integrity remains intact—for now.

Shortlist Already Forming

While no official names have been floated, several potential successors are gaining traction. Fed Vice Chair Michelle Bowman, former Fed Governor Kevin Warsh, and National Economic Council Director Kevin Hassett are all considered viable contenders. Each brings a different policy tilt, but all are seen as more aligned with Trump’s call for rate cuts.

Bessent himself, despite media speculation, dismissed any suggestion that he might take the role. “I have my hands full at Treasury,” he said.

Any nominee would need Senate confirmation, but with Republicans likely to maintain control after the November midterms, the path to approval could be smoother than in previous cycles.

Markets Brace for Shifts Ahead of 2026

The potential shift in Fed leadership is expected to influence monetary expectations going into 2025 and 2026. Traders are already watching speeches and commentary from potential candidates for clues on future policy leanings.

A pivot toward a more dovish Fed chair could reprice rate-sensitive sectors, boost equities, and weaken the dollar. Yet uncertainty around the transition could also fuel volatility, especially if Powell’s final months at the helm are marked by political friction.

While Bessent was careful not to suggest Powell’s early departure, the growing chorus around his replacement means traders can no longer ignore the personnel risks facing U.S. monetary policy.

Tips for Traders

• Watch bond yield curves for signs of market pricing on future Fed policy under a Trump-aligned successor.

• Track rate-sensitive equities, especially tech and growth stocks, which stand to gain from a dovish pivot.

• Monitor speeches by Bowman, Warsh, or Hassett for directional clues on monetary policy.

• Use options around key Fed meetings to hedge political volatility as the nomination window approaches.

• Keep an eye on the U.S. dollar, which may weaken if markets begin to expect deeper cuts.

• Look for rotation in financials and industrials, which may respond differently to shifts in yield expectations.