Bessent talks Fed succession options as Trump sends note to Powell

Treasury Secretary Scott Bessent on Monday outlined the options to replace Federal Reserve Chairman Jerome Powell as his boss Donald Trump published a letter he sent to Powell again asking for interest rates to be lowered.

Bessent told Bloomberg Monday that there are “people” already at the Federal Reserve who are under consideration to become the next central bank boss after Powell’s term expires next May.

It was among several new details the Treasury secretary provided about the administration’s thinking as the president and his advisers weigh options for how to fill Powell’s seat.

Meanwhile, President Trump applied more pressure on Powell with a new Truth Social post that showed a note the president sent to Powell alongside a list of the central banks around the world with lower interest rates than the US. His press secretary held up the note to reporters at a White House press conference.

“Jerome—You are, as usual, ‘Too Late’,” the note from Trump reads, telling Powell that he has “cost the USA a fortune” and urging him to “lower The Rate—by a lot!”

Trump on Truth Social also widened his criticism to the entire Fed board: “The Board just sits there and watches, so they are equally to blame.”

One option being contemplated by the administration, Bessent said, is that Trump appoints a new person to the Fed’s board of governors to fill a new 14-year seat that opens up with the scheduled departure of Fed governor Adriana Kugler on Jan. 31 — and “that person will go on to be chair when Powell leaves in May.”

“Or we could appoint the new chair in May. Unfortunately, that’s just a two-year seat,” he added in the interview with Bloomberg.

Even though Powell’s chairmanship is up in May, his term as a member of the board of governors does not expire until 2028. Powell has not said whether he intends to remain as a member of the board of governors through the end of his term.

When asked if there could be any confusion during the period before Powell leaves, Bessent dismissed that possibility by noting that “obviously there are currently people at the Fed who are under consideration” — without naming anyone in particular.

“So why would there be any confusion if you add another candidate in January?”

Trump said this weekend in an interview that aired on Fox News’ “Sunday Morning Futures” that he has three people in mind, without naming them. He did, however, use the name “Kevin,” which may have been a reference to former Fed governor Kevin Warsh.

“Kevin is very talented; I don’t know if it’s going to be him,” but added, “he wouldn’t be doing what Powell is.”

What Trump said he wants is a looser approach to monetary policy: “We are going to get some one into the Fed who is going to lower rates.”

People close to the administration have mentioned Warsh as among the candidates who have been discussed, along with current Fed governor Christoper Waller, National Economic Council Director Kevin Hassett, former World Bank president David Malpass, and Bessent.

When asked by Bloomberg Monday if the Fed chair post was a job that Bessent wanted, he said: “I will do what the president wants but I think I have the best job in DC.”

As for timing, he said “we will be working on chair Powell’s successor over the coming weeks and months.”

He did not hide his views about the current Fed and whether it should be acting to lower rates, as Trump has repeatedly urged. He again argued that any inflation from Trump’s tariffs will be transitory.

Because the Fed made a mistake in 2022 by not acting fast enough to combat a surge of inflation during the Covid-19 pandemic, “they seem a little frozen at the wheel here.”

Waller and another Fed governor, Michele Bowman, have both made a case since the last Fed meeting for rate cuts in July, arguing that any inflation from tariffs will not linger.

Powell and some of his other Fed colleagues continue to argue that the Fed should wait on any rate cuts to gauge the ultimate impact on inflation.

Atlanta Federal Reserve president Raphael Bostic Monday said that he wants to wait and see how tariffs play out in the economy before making a decision on what to do with rates, cautioning that Americans could see higher inflation from tariffs that could be longer lasting.

“I like to move in a direction when I know which direction to move in,” said Bostic in a conversation in the UK. “That would for me require more information than we have today.”

Some people close to the administration has said that Trump may look to appoint Powell’s successor early as a shot across the bow at the current chairman.

When asked about the notion of Trump naming a “shadow chair” before Powell’s term is actually up, Bostic said “if you’re going to be a central banker, you’re going to be used to people complaining about. But you turn on any TV in any country at any time, if it’s a business channel, someone is saying the central bank should be doing something other than what they’re doing.”

“If that’s going to get you upset and worked up, you probably should do something else because…it just comes with the territory.”

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