US Treasury Secretary Scott Bessent recommended that Federal Reserve Chair Jerome Powell leave the central bank’s board when his chair term ends in May 2026.
“Traditionally, the Fed chair also steps down as a governor,” Bessent said in a Tuesday interview with Bloomberg Television. “There’s been a lot of talk of a shadow Fed chair causing confusion in advance of his or her nomination. And I can tell you, I think it’d be very confusing for the market for a former Fed chair to stay on also.”
Powell’s term as a Fed governor lasts until January 2028, meaning he could remain on the board and participate in policymaking even after his chairmanship ends. Powell has consistently declined to say whether he plans to stay on as a governor, complicating decisions for President Trump and his team as they prepare to reshuffle Fed leadership next year.
“There’s a formal process that’s already starting” to identify the next Fed chair nominee, Bessent said. “There are a lot of good candidates inside and outside the Federal Reserve.”
When asked if Trump had asked him to serve as Fed chair, Bessent replied, “I am part of the decision-making process.” He emphasized, “it’s President Trump’s decision, and it will move at his speed.”
Following Bessent’s remarks, Treasury yields rose, with two-year yields reaching 3.93%. The Bloomberg Dollar Spot Index trimmed losses and was nearly flat as of 8:25 a.m. in New York.
Unless Powell confirms he will leave the board, Trump will have only one opening to fill next year, when Governor Adriana Kugler’s term expires in January. Bessent said last month a Fed chair announcement could come in October or November, ahead of that vacancy.
Trump has expressed a preference for a successor who supports lowering interest rates, criticizing Powell for maintaining rates despite cuts last year. Fed officials worry tariff hikes will raise inflation and prefer more data before reducing rates again. Possible successors include former Fed Governor Kevin Warsh, Trump’s National Economic Council director Kevin Hassett, Bessent himself, and current Fed Governor Christopher Waller—appointed by Trump and open to rate cuts as early as this month.
Pressure on Powell intensified this month amid Republican criticism over cost overruns in refurbishing two historic Fed buildings, with some suggesting this could justify his dismissal.
When asked on ABC News whether Trump has the authority to fire the Fed chair, Hassett said, “That’s a thing that’s being looked into. But certainly, if there’s cause, he does.”
Bessent, responding to Hassett’s comments, reiterated that Trump has stated he is not seeking to fire Powell.
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