Trump vows to replace Powell with Fed chair — a bold declaration at the NATO summit in The Hague, signaling the former president’s intent to intervene decisively in U.S. monetary policy. As Jerome Powell’s term runs through May 2026, Trump wants a successor who’s “all‑in” on steep rate cuts — up to 2.5% — reflecting his frustration with the Fed’s cautious pace.
By positioning the announcement as early as September or October 2025, Trump is signaling a strategic pivot: reshape central banking to fuel faster growth. In this article, we unpack the background, market response, possible successors, implications, and what’s next, offering exclusive insights you won’t find elsewhere.
Background: Why Trump Is Targeting Powell
In his NATO interview, Trump slammed Powell as a “stubborn mule” and “a stupid person” for resisting aggressive rate cuts. This marks the culmination of a long-standing feud: Trump previously floated firing Powell earlier this year but retreated amid market fallout.
What makes this moment different? Trump aims to replace Powell before his term ends in May 2026 — a rare pre-emptive move intended to shape market expectations now.
Market Reaction & Financial Fallout
Markets responded swiftly. The 10-year Treasury yield dropped ~2 bps to 4.26%, while the U.S. Dollar Index slid over 11% year-to-date, underscoring expectations of July rate cuts under a Trump-installed Fed chair.
Analysts note:
- Dovish signal: A Trump successor would align with his growth agenda, prompting bond traders to price in deeper rate cuts.
- Currency risk: The U.S. dollar hit a three-year low, sparking fears of currency wars and global volatility.
- Long-term market disruption: Interfering with Fed independence could ignite instability analogous to Nixon-era shocks.
Potential Replacements: Who’s in the Running?
Trump reportedly has “three or four” names under consideration. Prominent potential picks include:
- Kevin Warsh (ex-Fed governor): A hawk-turned-dove; Trump’s previous top choice.
- Scott Bessent (Treasury Secretary): Advocated for a “shadow Fed chair” ahead of Powell’s term ending.
- Kevin Hassett (NEC director): Known for deep loyalty and dovish leanings.
- Other contenders: David Malpass, Christopher Waller, Michelle Bowman.
Yet the White House disputes that a decision is imminent, emphasizing legal and institutional checks.
Legal & Institutional Limits
Under U.S. law, the President cannot dismiss a sitting Fed chair at will — only for cause like “inefficiency or neglect”. Trump’s strategy isn’t immediate firing—it involves an early nomination of a successor, sometimes called a “shadow Fed chair,” to pre-empt Powell’s influence.
But critics warn:
- This risks undermining the Fed’s institutional independence.
- Expect potential legal challenges and Supreme Court scrutiny.
- Long-term volatility may escalate if markets doubt central bank autonomy.
What This Means for You: Borrowers, Investors & Policy Watchers
- Mortgage & loan rates: If Trump succeeds, you could see lower borrowing costs—good short-term, perilous long-term amid rising inflation.
- Investment strategy: Markets may shift toward equities and risk assets under dovish policy, but also brace for currency swings and bond upheaval.
- Watch the Fed releases: Powell’s upcoming Congressional testimony and Fed Beige Book could hint at whether he’s pushed to expedite cuts.
Conclusion
Trump’s vow to replace Powell with a dovish Fed chair is more than political rhetoric — it’s an early strategic move aimed at reshaping macroeconomic direction before 2026. While markets are already reacting, the legality and institutional fallout remain open questions. Will Powell remain until May 2026? Or will a Trump successor shift U.S. monetary policy into a bold new era?
Stay tuned: decisions this fall could redefine interest rates, inflation control, and the Fed’s independence for years to come.
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[USnewsSphere.com / mw]
