Powell’s term as a Fed governor doesn’t end until January 2028, leaving it possible for him to remain at the central bank — and to participate in monetary policymaking — even after his tenure as the chair comes up next May. Powell has repeatedly declined to answer questions on whether he might stay on as a governor. That reticence has complicated the decision-making for President Donald Trump and his aides as they look to revamp Fed leadership next year.
“There’s a formal process that’s already starting” with regard to identifying the nominee to become next Fed chair, Bessent also said. “There are a lot of good candidates inside and outside the Federal Reserve.”
Asked whether Trump has asked Bessent himself to serve as Fed chair, the Treasury chief said, “I am part of the decision-making process.” He noted that “it’s President Trump’s decision, and it will move at his speed.”
Forecasting error
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Treasuries dropped after Bessent’s remarks, with two-year yields hitting a session high of 3.92%. The Bloomberg Dollar Spot Index pared losses and was little changed as of 7.55am in New York.
Unless Powell makes clear he’ll vacate his board position, Trump has one scheduled opening to fill next year, with Governor Adriana Kugler reaching the end of her term in January. Bessent said last month that one potential timeline would have a Fed chair name emerge in October or November, ahead of that January opening on the board.
Trump has made clear that he wants Powell’s successor to be someone who favours lowering interest rates. He has repeatedly blasted the Fed chair for standing fast on rates since he took office, after lowering them last year. Central bank policymakers have said they’re worried the president’s tariff hikes will push up inflation, and prefer to gather more information before opting to resume rate reductions.
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The latest reading on inflation is due Tuesday morning, with the June consumer price index. Bessent said he hadn’t looked at the release in advance of his appearance on Bloomberg, but said “I wouldn’t put too much emphasis on one number.” He pointed to the recent trend of inflation numbers that show fears about a “substantial price level rise” haven’t been substantiated.
“They’ve had some big forecasting errors,” with regard to the economy, Bessent said of the Fed. “And this may be one” as well, he added. Even so, Bessent highlighted that Trump has said “numerous times he is not going to fire Jay Powell.”
