On Monday, U.S. Treasury Secretary Scott Bessent responded to a question on whether he was willing to replace Jerome Powell as Federal Reserve chair.
What Happened: “I will do what the President wants,” Bessent said in an interview with Bloomberg TV on Monday, when asked about the likelihood of him heading the Central Bank after Powell’s term ends in May 2026.
He said, “I think I have the best job in D.C.,” pointing to the ongoing momentum within his department surrounding tax cuts, trade deals and major economic policies, while acknowledging that the administration was actively weighing options for Powell’s replacement.
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According to Bessent, an announcement on this could come as early as October or November, while he also highlights an upcoming vacancy on the Federal Reserve Board in January, suggesting that it could play into the succession plan.
“There's a seat opening up, a 14-year seat opening up in January,” Bessent said. “So we've given thought to the idea that perhaps that person would go on to become the chair when Jay Powell leaves in May.”
When asked about the appointment of a “Shadow Chair” ahead of Powell’s departure, Bessent played down the concerns, replying, “Not necessarily. We’ll see.”
Why It Matters: Tensions have been flaring between Trump and Powell for the past several months, leading to growing concerns regarding the Fed’s independence.
Early this week, Trump once again called Powell a “stupid person” and “a bad person” for keeping interest rates “artificially high,” while arguing that the benchmarks should drop to “1% or 2%.”
Trump further proposed a “bills over bonds” approach to dealing with the high interest rates on long-term debt, which involves the Treasury issuing more short-term debt at low interest rates, over longer duration bonds.
This received quick pushback from macro experts such as Craig Shapiro, who say that such a move could spell doom for the U.S. Dollar.
Economist Nouriel Roubini has criticized Trump’s attacks against Powell, calling it “a repeated own goal,” since even if he got his way, it would only lead to higher bond yields, owing to the “de-anchoring of inflation expectations.”
Price Action: The 10-Year Treasury notes trade at 4.216%, the 30-Year at 4.759%, and the 2-Year at 3.721%. The U.S. Dollar Index (DXY) continues to test newer lows, trading at 96.774, down 11.57% since the beginning of Trump’s second term.
Photo Courtesy: Maxim Elramsisy On Shutterstock.com
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