Former U.S. President Donald Trump has once again made waves in the financial and political arenas by hinting at a rapid move to replace current Federal Reserve Chair Jerome Powell. In a recent statement, Trump emphasized that he would announce the next Federal Reserve Chair “soon,” signaling a major shift in the leadership of one of the world’s most influential financial institutions should he regain the presidency.
Background: Trump vs. Powell
Jerome Powell, appointed by Trump himself in 2017, has had a tumultuous relationship with the former president. Although Powell was initially seen as a safe and pragmatic choice, tensions quickly surfaced during Trump's presidency as Powell resisted political pressure to keep interest rates low. Trump publicly criticized Powell on numerous occasions, even referring to him as a greater enemy to the U.S. than China’s President Xi Jinping during the height of the U.S.–China trade war.
Now, with Trump campaigning for a second term in the 2024 presidential election, speculation is intensifying that he intends to immediately remove Powell from his role, despite Powell’s term officially ending in 2026.
Why Trump Wants a New Fed Chair
Trump and his allies argue that the Federal Reserve under Powell has been too aggressive in raising interest rates, hurting economic growth and inflating borrowing costs for American families and businesses. Trump has long favored low interest rates and looser monetary policy to stimulate the economy, which contrasts sharply with Powell’s recent hawkish stance aimed at curbing inflation.
By replacing Powell, Trump would seek to install a Fed chair more aligned with his economic vision—one likely to support interest rate cuts, market-friendly policies, and potentially a reevaluation of the Fed’s independence from executive influence.
Who Could Replace Powell?
While Trump has not yet named any potential candidates, several names are rumored to be in contention. These include:
- Judy Shelton: An economist and Trump loyalist known for her support of the gold standard and criticism of Fed independence.
- Kevin Warsh: Former Fed governor with close ties to Wall Street.
- Larry Kudlow: Trump’s former economic advisor, though considered less likely due to his media commitments.
- Christopher Waller: A current Fed governor who has sometimes supported dovish positions.
Each candidate would represent a significant ideological shift in Fed leadership and could steer U.S. monetary policy in a drastically different direction.
Market and Institutional Reactions
Financial markets are watching these developments closely. Replacing the Fed Chair outside the normal appointment cycle could unsettle investor confidence, particularly if the move is perceived as politically motivated.
The Federal Reserve is designed to be an independent institution, and any perceived threat to its autonomy can have global implications. Analysts warn that politicizing the Fed could diminish its credibility, impact the U.S. dollar’s stability, and influence long-term economic policy.
Still, Trump’s supporters argue that fresh leadership is necessary to bring the Fed closer to the needs of everyday Americans rather than catering to global financial elites.
What This Means Going Forward
Trump’s announcement signals that if he wins the 2024 election, major changes are in store not just for the executive branch, but also for U.S. monetary policy. A new Fed chair chosen by Trump would likely pursue a very different strategy than the current regime, possibly accelerating rate cuts, pushing back on regulation, and revisiting the Fed’s core mandates
Whether this move will benefit the economy or destabilize financial systems remains to be seen. One thing is certain: the next Federal Reserve Chair could play a defining role in shaping the economic landscape of the next decade.