Fed Chair Jerome Powell may still have more than a year left in his term, but behind closed doors, the Trump administration is already preparing to move on.
According to Treasury Secretary Scott Bessent, the White House is short-listing candidates to succeed Powell and intends to begin interviews this fall, well before the current Fed chief’s term officially ends in May 2026.
While Powell would remain a Fed governor through January 2028, the administration could lean on political pressure to encourage an earlier exit.
Trump’s push to reshape the central bank has long been viewed as a fringe theory. But that changed last October when the former president told Bloomberg he believes the White House should have a say in how the Fed sets interest rates.
“I don’t think I should be allowed to order it, but I think I have the right to put in comments as to whether or not the interest rates should go up or down,” Trump said before the election.
Since returning to office, Trump has continued to push Powell to cut rates, accusing the Fed of “playing politics” and reacting too slowly to both inflation and economic weakness.
Under Powell, the central bank has earned a reputation for caution, with critics arguing that the Fed lagged behind inflation after the pandemic and is now dragging its feet again as growth slows.
Markets brace for new monetary regime
The prospect of a Trump-appointed Fed chair has already sparked speculation that aggressive rate cuts and fresh stimulus could return as early as the second half of 2026.
“Powell gets replaced [in] May 2026. Then QE starts in the second half of the year,” economist Alex Krüger wrote.
“The Trump Administration knows economic weakness is coming from tariffs in 2025. This sets up perfectly for 2026 to be the year of interest rate cuts and economic stimulus, with the newly appointed Fed Chair,” added The Kobeissi Letter, a widely followed market newsletter.
The timeline may prove politically convenient as the U.S. economy begins to feel the drag of Trump’s trade war. The Atlanta Fed now projects a 2.4% contraction in Q1 GDP, which would mark the worst quarter since the Covid-era collapse.
According to The Wall Street Journal, Trump is willing to risk a recession to reshape global trade but has privately warned advisers he wants to avoid tipping the economy into a depression.
If Powell doesn’t pivot fast enough, Trump appears more than ready to put someone in place who will.
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