President Donald Trump has made no bones about his annoyance with current U.S. Federal Reserve Chairman Jerome Powell.
Speaking to reporters at the NATO summit in The Hague on Wednesday, June 25, Trump said Powell "goes out pretty soon, fortunately, because I think he’s terrible," noting that he knows "within three or four people who all I’m going to pick."
Trump is insistent that the Federal Reserve should cut interest rates. And the president's well-known demands for loyalty make Powell a clear target as the central bank continues to hold rates steady in order to keep inflation from reaccelerating.
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On the surface, this dynamic would make it seem like Jerome Powell could be leaving the Federal Reserve any day now.
But there remain questions about timing, whether Trump even has the power to fire Powell, as he has threatened to do, and who will be Powell's eventual replacement.
Can President Trump fire Fed Chair Jerome Powell?
To begin with, the Federal Reserve is not a single bank, nor is it led by just one person.
Rather, the Federal Reserve Act of 1913, which established the Fed as the U.S. central banking system, created 12 regional reserve banks and a Board of Governors of the Federal Reserve System that consists of seven individuals.
This board is nominated by the president and confirmed by the Senate. One of these board members is then nominated for the chair position and the Senate votes on that appointment, too.
That may sound like semantics, but the process shows it's not quite as simple as President Trump firing one person and hiring another. At least, not according to legal precedent and the Federal Reserve Act.
Interestingly, Powell was appointed to lead the Fed by Donald Trump in 2018. He was then confirmed by the Senate overwhelmingly, by a vote of 84-13.
His first four-year term in the role expired, but he was again confirmed in 2022 for another four-year stint by an 80-19 vote.
That puts Powell's current term as chair at expiration in May 2026 – although his broader appointment to the Fed's board technically won't expire until January 2028, regardless of chairmanship status.
There has been speculation that Powell will be forced out sooner, or that he will simply resign given recent criticism.
But President Trump also publicly threatened to fire Powell during his first term, too, and those threats came to nothing.
That was in part because many legal experts have questioned whether the executive branch even has the power to make such a termination at the Fed, and Powell seemed willing to fight any such decision in court if it came to that.
Trump admittedly seems less worried about such legal hurdles this time around, however, as evidenced by other moves, including massive federal layoffs that have been challenged in court.
Rather than firing Powell, buzz is building that Trump could announce Powell's replacement as soon as this summer, effectively creating a "shadow Fed chair." The Wall Street Journal reported that this could happen by September or October, if not sooner.
Who could replace Powell as Fed chair?
One way or another, either because of his 2026 term expiration or a potential firing, Powell's days as Fed chair are numbered. So, who will be next in line as Federal Reserve chairman?
Here are a few potential replacements that have been mentioned recently:
Chris Waller, current Federal Reserve Governor
Technically appointed during Trump's first term, Christopher Waller was a rare "lame duck" appointment who squeaked past his confirmation hearing with a 48-47 vote in December 2020 – just before President Biden took office.
The vote reflects dissatisfaction by Democrats that Biden didn't get to fill the seat, as well as concerns about the "dovish" approach of Waller that would favor lower rates and looser bank regulation.
Previous objections aside, Waller has a strong resume with a Ph.D. in economics and a history of teaching at prestigious schools such as the University of Notre Dame.
And, as a sitting member on the board through 2030, it would be easy to just vote him in as chair rather than two-step him with an initial board nomination first.
Kevin Warsh, former Federal Reserve Governor
Kevin Warsh served as former Fed Chair Ben Bernanke's right-hand man during the 2008 financial crisis. That gives him tremendous street cred on Wall Street, and would help provide stability if markets get rocky due to Trump's very public pressures on the central bank.
But what really has Warsh on the short list is his great relationship with President Trump, who had reportedly considered the economist for the position of Treasury secretary before nominating Scott Bessent.
Though a "hawk" that generally favors higher interest rates rather than the risk of inflation, his record as an ally of the Trump administration is critical and raises his chances of rejoining the Fed and taking its reins as chair.
Kevin Hassett, White House National Economic Council director
Kevin Hassett has the one-two punch of conservative political credentials and academic pedigree.
Hassett worked at the American Enterprise Institute, a conservative think tank, and advised other leading Republicans such as John McCain, George W. Bush and Mitt Romney.
Most importantly, he also served as chairman of the Council of Economic Advisers in the first Trump administration and returned to the White House to serve as its current director of its National Economic Council.
There's one caveat, though: Hassett argued in his 2021 book that previous efforts to fire Powell during Trump's first term would have harmed the Fed's reputation as an objective institution.
More recently, he has tried to walk back from those remarks, but if Trump does jump the gun before Powell's term expires next May, that could make any Senate confirmation hearings of Hassett interesting to watch.
Scott Bessent, Treasury secretary
Another name that has been floated in recent weeks is current Treasury Secretary Scott Bessent.
Bloomberg reported earlier this month that President Trump is considering nominating Bessent to replace Powell as Fed chair when his term expires in May 2026.
In addition to his economic expertise, Bessent has a strong understanding of Wall Street. Indeed, prior to joining the Trump administration, Bessent served as chief investment officer of Soros Fund Management and founded global hedge fund Key Square Capital Management.
Bessent initially floated the idea of a "shadow Fed chair last year. Speaking to Barron's in October 2024, the secretary suggested that Trump could nominate a Fed chair with plenty of time before Powell's term is up.
"And based on the concept of forward guidance, no one is really going to care what Jerome Powell has to say anymore," he said.
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