TLDR
- The search for Jerome Powell’s successor begins as political pressure mounts, with a new Fed Chair potentially announced by fall 2025.
- Trump’s calls for Powell’s resignation grew, citing dissatisfaction with high interest rates impacting economic growth.
- Treasury Secretary Bessent suggests Powell step down as Fed Governor after 2026 to avoid market confusion.
- Potential Fed Chair candidates include Kevin Warsh, Kevin Hassett, and Scott Bessent, with Warsh favored in market bets.
The search for a successor to Federal Reserve Chair Jerome Powell has officially started. U.S. Treasury Secretary Scott Bessent confirmed the beginning of the process amidst growing political pressures and ongoing debates over U.S. monetary policy.
Powell’s current term as Fed Chair ends in May 2026, but speculation about his future role at the central bank has been rising. As President Donald Trump continues to call for Powell’s resignation, the search for a new leader at the Federal Reserve has become a key point of focus.
The Process to Find Powell’s Successor
Scott Bessent revealed in a recent interview with Bloomberg Television that the search for a new Federal Reserve Chair is underway. “There are a lot of great candidates,” Bessent said, signaling that the process will include individuals from both inside and outside the Federal Reserve.
Bessent also noted that the process could move quickly. He added that Powell should consider stepping down as a governor when his term as chair ends in 2026 to avoid market confusion.
Powell’s term as Fed Chair is set to conclude in May 2026, while his term as a governor runs until 2028. This creates uncertainty about whether Powell would remain on the board, potentially influencing monetary policy decisions after stepping down as chair.
Bessent suggested that it would be “confusing” for the markets if Powell were to stay on as a board member after resigning as chair.
Political Pressure Fuels Uncertainty Around Powell’s Future
The speculation surrounding Jerome Powell’s future has grown, partly due to increasing political pressure. President Donald Trump has been vocal about his dissatisfaction with Powell’s handling of monetary policy, particularly the central bank’s interest rate decisions.
Trump has repeatedly called for Powell’s resignation, claiming that high interest rates are harmful to economic growth.
This political pressure has added complexity to the situation. While Powell’s term as Fed Chair ends in 2026, there is increasing speculation that he may step down earlier. The issue has raised concerns in financial markets, as Powell’s leadership at the Federal Reserve could remain uncertain.
Additionally, questions have arisen regarding whether Powell will continue to influence policy even after stepping down as chair.
Leading Candidates to Replace Powell as Fed Chair
The list of potential candidates to succeed Powell includes several prominent figures. According to reports, National Economic Council Director Kevin Hassett, former Federal Reserve governor Kevin Warsh, and Treasury Secretary Scott Bessent are among the leading candidates for the role. These individuals have been discussed within the Trump administration in recent months.
Other possible candidates include Trump administration official and ex-World Bank president David Malpass, along with current Fed Governor Christopher Waller. Market speculation has placed Kevin Warsh as the favorite to replace Powell, with Polymarket giving him a 20% chance of becoming the next Fed Chair, followed closely by Bessent and Hassett, both with 18% odds.
Market Reactions and Timing of the Fed Chair Transition
Bessent indicated that the timeline for announcing a new Fed Chair could be as soon as the fall, with a potential announcement by October or November. This could come before the end of Adriana Kugler’s term as a Federal Reserve Board member in January 2026, which would provide one vacancy for President Trump to fill.
The announcement of the search process led to immediate reactions in the financial markets. Following Bessent’s interview, yields on two-year U.S. Treasury notes rose, reflecting the uncertainty surrounding the future leadership of the Federal Reserve.
The ongoing scrutiny and political pressure on Powell are likely to continue to shape the direction of the search for his successor in the coming months.
As the process moves forward, the focus remains on how it will affect U.S. monetary policy and financial markets. The decision on Powell’s successor is likely to have long-lasting effects on the Federal Reserve’s approach to managing the U.S. economy.
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