Trump May Name New Fed Chair Early — But It Will Confuse Markets

When it comes to the Federal Reserve, President Trump can’t get no satisfaction. He wants the Fed to cut interest rates, and it continually declines to do so.

Trump wants regime change at the Fed — not continuity. I Photo: Federalreserve Flickr

He mused about firing Fed Chair Jerome Powell earlier this year, but the Supreme Court quashed that idea. He routinely trolls Powell anyway, to no effect, Rick Newman wrote in a column for Yahoo Finance.

Now, Trump says he may choose a replacement for Powell months before Powell’s term expires in May 2026.

Powell would remain in the job until next May, while the “shadow chair” would offer an alternative view of what the central bank’s monetary policy could be — or would be once Powell is gone.

That might telegraph to markets that lower rates and looser monetary policy are coming once Powell exits. Like much of what Trump does, the idea is unprecedented and jarring.

The Fed is the most powerful financial institution in the world, fully capable of moving markets and influencing the direction of the economy. Investors parse every word the Fed chair utters, looking for signs of future action.

Two voices saying contradictory things about Fed policy couldn’t possibly be helpful. But is the idea really that crazy?

Corporations do CEO succession planning all the time — and it’s actually considered mismanagement if they don’t plan for the departure of key executives.

Warren Buffett, for example, said in May that he finally plans to step down as CEO of Berkshire Hathaway at the end of this year, with longtime deputy Greg Abel taking over.

There’s a difference, however, between prudent succession planning and what Trump seems to have in mind. Abel is not going to spend the rest of 2025 going on TV to criticize Buffett’s decisions and promise to shake things up the moment he’s in charge.

He may make subtle changes over time, but investors broadly expect him to manage Berkshire much as Buffett has.

Trump, on the other hand, wants regime change at the Fed — not continuity.

Whoever he picks will likely be more dovish than Powell and far more willing to cut rates. Powell and most Fed policymakers have been holding off on rate cuts since last December, waiting to see if inflation picks up.