The chairman of the Federal Reserve, Jerome Powell, attested on June 25, 2025 in Washington, DC, in front of the Senate Committee for Banks, Housing and City Affairs in a hearing on the “half -yearly money report of monetary policy at the Congress” on Captil Hill.
Kent Nishimura | Getty pictures
The chairman of the Federal Reserve Jerome Powell has largely enforced two hearings on the Capitol Hill this week, but increases to a much greater challenge: a potential threat that President Donald Trump could undermine his authority by naming his choice of leading the central bank next year.
As Powell said in front of the Senate banking committee on Wednesday and generally held a warm stock exchange, Trump was at the NATO summit in the Hague, the Netherlands, and praised his recent attacks on a man he had nominated almost eight years ago for the Fed job.
“I think he's terrible,” said Trump when he was asked during a press conference on his intentions for the next Fed Leader. Trump then called Powell a “very average spiritual person” and added that he had “a low IQ for what he does” and is “a very political type”.
“I think he's actually a very stupid person,” said Trump.
While Powell is not particularly new to Trump's name call, the words could now signal action.
Potential candidates
After the intensive criticism, Wall Street installed the potential of a “shadow chair” or someone Trump as a central bank until Powell's term of office runs in May 2026.
The lecture had an impact on the markets: On Thursday, the dealers accelerated the bet on tariff shortcuts this year, with three reductions to about 60% of the likelihood, compared to a high probability of two a few days ago, according to CME group data. The yields of the Ministry of Finance fell at the shorter end of the curve, where the Fed has its influence and much more than that falls at the long end. The dollar had also dropped strongly towards his global colleagues.
Trump confirmed that he has a list of potential Powell successors on “three or four people” without naming the finalists.
The squad of potential candidates has become known: Finance Minister Scott Bessent, director of the National Economic Council Kevin Hassett, former governor of the Fed, Kevin Warsh, and as a dark horse in his own selection of Christopher Waller, who serves as a governor and has recently been a lawyer for lower interest.
In some circles, Besser was considered a front leader, although sources that are familiar with Trump's thinking say that this is not necessarily the case. Bessent himself said that he is not interested in the job, although that could change if Trump asked him to take him.
A report on Wall Street Journal on Wednesday evening argued that the former President of the World Bank, David Malpass, is also in the race. The journal report showed that Trump is considering naming the successor earlier than expected to influence interest policy.
Officials from the White House did not respond to a request for comments that went beyond Trump's statements at the press conference.
An active fed
There are several problems that make Trump's wish to name a chair now. On the one hand, there is no immediate open positions, although governor Adriana Kugler's term of office ends in January 2026. Powell's term as a governor himself does not run until 2028, although the chair will run next year.
“This plan is probably not constitutional and would politicize the FED for a few months before the stability will be restored next May,” said Greg Valliere, chief strategist of the AGF perspectives, on Thursday. “But the damage to the independence of the FED would be considerable if Trump became a monetary rear register driver in autumn and the Fed guidelines for the second Fed.”
The most recent Trump-Powell-Tumult is for the central bank for a busy time.
In the past few days, the FED has taken two major steps to banking: the “reputation risk” as criteria for bank exams, an allusion to Trump's complaint about politically motivated degradation of large institutions and the relaxing of reserve capital rules for systemically important banks. The latter measure was also seen by the deputy chairman for monitoring Michelle Bowman, also a Trump representative, but someone who is viewed at best as an external hope for the Shadowstuhl finalist.
Nevertheless, Trump's biggest criticism remains, namely the refusal of the Powell Open Market Committee of the Federal Open Market, at lower interest rates, a sticking point.
In an interview on Thursday by Chicago Fed President Austan Goolsbee, CNBC announced that the political waves were neither a factor for decision -making nor are the name of a shadow chair.
“That would have no influence on the FOMC itself,” said Goolsbee. “Just look at the minutes and transcripts. You can see word by word of what the reason for the decision, and it is not about elections and it is not about partisan policy.”
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