Jerome Powell's silence on his future complicates Trump's Fed chair search

WASHINGTON — As President Donald Trump and his advisers begin weighing replacements for Federal Reserve Chair Jerome Powell, they’re running into one significant complication: It’s not clear that Powell will leave the U.S. central bank next year.

The Fed chief has repeatedly declined to say whether he will step down when his four-year term as chair expires in May, or remain on the Fed board — something he could technically do until his tenure as a governor expires in January 2028. The prospect of Powell remaining at the central bank has prompted administration officials to begin planning for multiple scenarios for his replacement, as Trump seeks a chair who will support his economic agenda.

The president said Tuesday he has “two or three top choices” to potentially succeed Powell, but declined to name them. In recent weeks, Trump’s advisers have even discussed with him the possibility that Scott Bessent could simultaneously serve as Treasury secretary and Fed chair, according to people familiar with the matter. Such a move would be unprecedented since the two roles were separated in 1935, in legislation aimed at giving the Fed a measure of independence.

“Any reporting suggesting that the President is considering having Secretary Bessent serve as both Treasury Secretary and Federal Reserve Chairman concurrently is absolutely fake news,” a White House official said.

A Treasury spokesperson pointed to Bessent’s comments earlier this week on his potential candidacy. “I will do what the president wants, but I think I have the best job in D.C.,” he said on Bloomberg TV.

As the selection for a new Fed leader unfolds, the president has made clear the next chair must be “somebody that wants to cut rates.” Powell has led his colleagues in standing pat this year, saying they need more certainty that Trump’s tariffs won’t trigger a persistent rise in inflation.

When asked about his tenure Tuesday in a panel discussion with fellow central bankers from around the world, Powell said, “I have nothing for you on that.”

Powell’s circumspection has frustrated some of Trump’s advisers, who are taking the silence as an attempt to push back against the president’s desire for more influence on monetary policy, according to people familiar with the matter.

If he did stay on as a Fed governor, Powell would leave Trump with just one scheduled opportunity to fill a board slot — Governor Adriana Kugler’s, whose term ends in January — until the president’s final year in office.

Bessent, publicly acknowledging Powell could stay, said in a Bloomberg TV interview Monday one idea would be to fill Kugler’s slot with the person who would later be elevated to chair. Choosing an existing governor is another option, he said.

Powell’s coyness has raised speculation that he could stay on the board if Trump picks a nominee who is overly deferential to the president’s demands, said Neil Dutta, head of economic research at Renaissance Macro. “That’s the leverage Powell has right now by not declaring his intentions.”

Pressure Rises

While Trump has sometimes speculated about firing Powell, a May Supreme Court ruling raised the hurdle for that, without having legal “cause.”

Pressure on Powell heated up further Wednesday, with Trump’s housing-finance chief, Bill Pulte, accusing Powell of misleading lawmakers about Fed building renovations. Pulte claimed the issue was sufficient to remove him “for cause,” and the president later posted on social media that Powell “should resign immediately.”

The supercharged political environment surrounding the U.S. central bank makes the upcoming chairmanship decision all the more sensitive than it usually is. Typically, Fed chairs retire from the central bank when their terms at the helm end, but the political backdrop has rarely been as tense as today’s.

Governor Michael Barr took the step in February of resigning as vice chair for supervision, while remaining on the board — constraining Trump’s options for reshaping the board. “The independence of the Federal Reserve is critical to our ability to meet our statutory mandates,” Barr emphasized that month.

Christopher Waller, a current governor who was nominated for the Fed board by Trump in his first term, is one option for the chair job. Kevin Hassett, the White House’s National Economic Council director and ex-Fed official Kevin Warsh are also top contenders from outside the Fed, people familiar with the matter said. Former World Bank President David Malpass has also been floated.

Powell’s Influence

Trump’s nominee would need to be confirmed by the Senate, and Republicans’ narrow majority means they couldn’t lose more than three votes for the pick.

Powell has often declined to answer politically tinged questions related to Trump amid the president’s steady stream of criticism.

“I’m very focused on just doing my job,” Powell said this week when asked about Trump’s attacks. “The things that matter are using our tools to achieve the goals that Congress has given us.”

Sarah Binder, a professor of political science at George Washington University, said “it’s a sort of a defensive mechanism” to forgo specific comment on when he’ll leave. “My guess is Powell doesn’t see it in his interest, but really in the Fed’s interest, to engage with the president at all.”

If Powell did remain on the board, he could continue to influence policy decisions made by the 19-person interest-rate setting Federal Open Market Committee, having worked with most members for years. Rate moves are made by majority vote, and it’s unclear what sway the new chief might have, especially if the candidate came from outside the current board.

“He’s developed a lot of loyalty among the governors and Fed staff who I expect would remain loyal to him” if Trump picked a “toady,” Dutta said. “The problem Trump has created for the next chairman is making his desire for rate cuts so obvious that it becomes very challenging for that person. You look like a political stooge.”

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(With assistance from Catherine Lucey.)