Trump Eyes Jerome Powell’s Replacement: What It Means for the Fed, Markets, and the Economy
In a move that could reshape the future of U.S. monetary policy, President Donald Trump is reportedly preparing to replace Federal Reserve Chair Jerome Powell before his term ends in May 2026. Frustrated by the central bank’s decision to keep interest rates steady despite persistent inflation and geopolitical uncertainty, Trump is weighing a shortlist of loyalists and market-savvy insiders as possible successors.
This article breaks down what’s happening, who might replace Powell, and why investors should care.
Why Trump Is Fed Up With Powell
The relationship between President Trump and Jerome Powell has never been smooth. But recent months have seen a sharp escalation in Trump’s public criticism. The Federal Reserve’s refusal to aggressively cut interest rates in the face of slowing job growth and sticky inflation has drawn the president’s ire.
In multiple Truth Social posts, Trump has referred to Powell as “Mr. Too Late,” accusing the Fed of “choking the recovery” and being “blind to the needs of American workers and businesses.”
Despite the criticism, Trump has stated he won’t fire Powell directly. As he told reporters in May 2025:
“I’m not going to fire him — I’ll let his term run out. But we will absolutely be replacing him with someone who understands how to get this economy booming again.”
Who Could Replace Powell?
Scott Bessent – The Insider Favorite
According to reports from Bloomberg and Reuters, Scott Bessent, Trump’s Treasury Secretary and a former Soros Fund Management executive, is emerging as a top contender. Bessent is widely known on Wall Street for his financial acumen and has earned the president’s trust as someone who can both navigate markets and execute on Trump’s economic vision.
His appointment would be historic — a sitting Treasury Secretary moving directly into the Fed Chair role is unprecedented. Critics warn this could compromise the Fed’s independence, but supporters argue it would bring policy coherence and a much-needed shake-up.
From a market standpoint, Bessent is seen as someone who favors lower interest rates and a more aggressive posture toward China and inflation-driven price controls.
2. Kevin Warsh – The Institutional Hawk
Kevin Warsh, a former Fed governor and now a Hoover Institution fellow, is also on Trump’s shortlist. He was a top candidate for the position during Trump’s first term and has continued to advise the administration informally.
Warsh is viewed as more hawkish than Powell — he supports tighter monetary policy but is also critical of the Fed’s communication strategy. Some observers see him as a stabilizing figure who could help the Fed regain market trust while still aligning with Trump’s political goals.
3. Christopher Waller – The Technical Insider
Current Fed Governor Christopher Waller, a known dove and former academic, is also being floated. Waller has voiced support for some of Trump’s past economic strategies and has experience with the Fed’s internal processes. While less politically aligned than Bessent or Warsh, Waller may be the least controversial pick in terms of Senate confirmation.
4. Other Names in the Mix
Kevin Hassett, head of the National Economic Council
David Malpass, former World Bank President
Judy Shelton, Trump’s controversial former Fed nominee
All bring varying degrees of ideological alignment with the Trump administration, but their chances may hinge on how Trump balances loyalty with optics heading into the 2026 midterms.
What’s Really Going On: A Strategy of Pressure
Trump’s decision to publicly consider a replacement for Powell — more than a year before the Fed Chair’s term ends — is not just about personnel. It’s also about sending a signal.
By floating names like Bessent and Warsh, Trump is pressuring the Fed to pivot toward rate cuts, hoping the mere threat of a shake-up might sway Powell and his colleagues to ease policy. Markets are interpreting this as a warning shot, and Fed officials are reportedly on high alert.
Economists from Moody’s and Goldman Sachs have noted that this strategy could backfire. A perceived politicization of the Fed could rattle investors and spark volatility in the bond market.
“Any move to replace Powell before his term expires — or even pre-announce a replacement — risks undermining the Fed’s credibility,” said Krishna Guha of Evercore ISI.
What This Means for Markets
Wall Street is watching closely.
Equities: A more dovish Fed chair could boost stock valuations by pushing borrowing costs down.
Bonds: Treasurys could see more yield curve inversions as the market reacts to political interference.
Dollar: Uncertainty at the Fed could weaken the dollar, especially if inflation accelerates.
Gold and Bitcoin: Assets typically seen as hedges against instability could benefit from Fed-related volatility.
Investor Takeaways
If you’re an investor, here’s what you need to watch:
Interest Rate Trajectory: A Powell replacement could lead to quicker cuts or even unconventional stimulus.
Fed Credibility: A perceived puppet appointment may increase inflation expectations and hurt long-term bond performance.
Regulatory Environment: Trump allies like Bessent may push for looser banking rules, which could benefit regional banks and fintech.
Volatility: Expect spikes around major Fed announcements, especially if political influence is perceived to be growing.
The Bigger Picture: Fed Independence at Risk?
The Federal Reserve’s credibility has always relied on its perceived independence from political interference. Powell himself was nominated by Trump in 2017 but has since become a frequent target of criticism — particularly for prioritizing inflation control over economic growth.
The early push to name his successor risks turning the Fed Chair role into just another political appointment — undermining one of the most powerful economic institutions in the world.
The Financial Times perhaps said it best:
“Donald Trump is making Fed chair the world’s worst job.”
Final Thoughts
President Trump’s effort to replace Jerome Powell with someone more aligned with his vision is a political and economic turning point. Whether it’s Bessent, Warsh, Waller, or another insider, the stakes are massive: the next Fed Chair will have the power to shape interest rates, inflation policy, and investor confidence for years to come.
Investors, economists, and policymakers should brace for impact. A battle over the Fed’s independence is brewing — and your portfolio might be caught in the crossfire.
