Trump plots doing the unthinkable with Fed boss Jerome Powell

Daily Mail​

4 hours ago

President Trump is considering naming the next chair of the Federal Reserve despite Jerome Powell still having 11 months left in the post.
The move could dramatically undermine Powell who, along with the Open Market Committee, is responsible for setting benchmark interest rates that affect everything from mortgage rates to car loans.
Trump has repeatedly expressed his disdain for Powell and his cautious approach to lowering interest rates. The President even threatened to fire him outright, before walking back the idea.
Now, the Wall Street Journal reports the White House may announce Powell's replacement as early as this summer, far ahead of the typical timeline.
The traditional transition period for announcing new Fed chairs is three to four months.
Such an early nomination could create confusion in markets and turn the incoming candidate into a 'shadow chair,' publicly challenging Powell's decisions ahead of the official transition.
'The Administration is now laying the groundwork — including with The One, Big, Beautiful Bill — to turbocharge economic, job, and investment growth, and it's high time for monetary policy to complement this agenda and support America's economic resurgence,' a White House spokesperson said on Wednesday.
Wall Street is particularly nervous about an early nomination as the independence of the Federal Reserve is seen as vital for market stability.
Markets respond not just to official Fed decisions, but also to hints about future moves — meaning mixed signals could cause turmoil.
'You're going to have two people trying to steer the ship: One that's actually steering it, and one that's the backseat driver,' Ryan Sweet, chief US economist at Oxford Economics told Reuters.
Wall Street has been unnerved by the President's willingness to push the boundaries of the Fed's independence from the White House.
A new Fed chair seen as under Trump's influence would also concern Wall Street.
'Whomever is appointed, the key thing to monitor is whether they are perceived as being a political appointee,' Eric Winograd, chief U.S. economist at AllianceBernstein told Reuters.
'And by that, I mean someone whose views change with the whims of the president.'
Callie Cox, chief market strategist at Ritholtz Wealth Management agreed that the next Fed chair will be crucial.
'Any Wall Street manager would tell you that Fed independence is the golden rule of markets,' Cox told the publication.
Treasury Secretary Scott Bessent (left) and David Malpass (right) are top contenders
Former governor of the Federal Reserve Kevin Warsh (left) and White House economic adviser Kevin Hassett (right) are said to be in the running
Federal Reserve Gov. Christopher Waller has also been tipped as a Trump nomination
'To move away from that can introduce a whole host of issues.'
A wildcard choice for the next chair could also discombobulate the markets.
The top candidates are currently White House economic adviser Kevin Hassett; former Fed Governor Kevin Warsh; former World Bank President David Malpass; Fed governor Christopher Waller and Treasury Secretary Scott Bessent, the Journal reported.
The Fed's 'dual mandate' is to keep inflation low while maintaining a healthy labor market.
Economists have warned that Trump's tariffs will raise prices, something that will require interest rates to stay elevated.
However, a slowdown in the job market will pressure the central bank's monetary policymaking committee to make a cut.