On July 15th, President Trump of the United States stated in a press interview at Andrews Air Force Base following his trip to Pittsburgh that Treasury Secretary Scott Bessent is one of the candidates to replace Jerome Powell as the Chairman of the Federal Reserve (FED). However, he also hinted that he might not immediately replace the current chairman.
Trump, who has been criticizing Powell for not lowering interest rates in the US for months and has called for his resignation multiple times, mentioned the excessive costs of the $2.5 billion renovating project at the Federal Reserve headquarters in Washington as potential grounds for dismissal.
Regarding the possibility of firing the Federal Reserve chairman due to cost overruns, Trump said, “I think it is a reason.” He further criticized Powell’s performance, lack of flexibility, and the need for an extravagant workspace.
Last week, White House Office of Management and Budget Director Russell Vought sent a letter to Powell accusing him of mismanagement, highlighting inconsistencies between Powell’s testimony to Congress regarding the Federal Reserve renovation project and the actual project changes.
The Federal Reserve released a Q&A document on its official website this week detailing the renovation project’s specifics, emphasizing cost reduction through integrating most of the Federal Reserve’s operations in the long term. They explained that cost increases were due to various factors such as differences between estimates and actual costs, toxic soil contamination, and more asbestos issues than anticipated.
Although the US unemployment rate is low, inflation rates are higher than the Federal Reserve’s 2% target. Federal Reserve officials are reluctant to lower interest rates currently in the 4.25% to 4.5% target range, fearing that Trump’s tariff policies may trigger further price increases.
Data released on Tuesday showed consumer prices rose in various categories like coffee, audio equipment, and household goods. In June, the overall consumer price index rose by 0.3% month-on-month, with an annualized inflation rate of around 3.5%, higher than May’s 0.1% monthly increase.
Officials from the Trump administration believe that the tax cuts bill passed by Congress and in effect will spur private sector investment and strengthen the US economy. They argue that while tariff hikes may lead to short-term price increases, long-term inflation won’t persistently rise.
Bessent stated in an interview with Bloomberg on Tuesday that he has initiated the “formal process” to search for Powell’s potential successor. He mentioned there are many excellent candidates and the progress will determine the next steps.
Besides Bessent, other potential candidates to replace Powell include former Federal Reserve Governor Kevin Warsh and Trump’s Chief Economic Advisor Kevin Hassett.
Powell was initially appointed by Trump as the Chairman of the Federal Reserve during his first presidential term and was reappointed by former President Biden for the second term. His chairmanship term will end in May 2026, with his term as a Federal Reserve Governor continuing until January 31, 2028.
(This article referenced relevant reports from Reuters and The Hill)