by For a while now, President Trump has considered removing Jerome Powell, the chair of the Federal Reserve. But if that were to happen, who would take his place?
Former Fed Governor Kevin Warsh, who was former Fed Chair Ben Bernanke’s go-between with Wall Street during the 2008 financial crisis, is the front-runner, according to administration officials.
Warsh, who frequently agrees with Trump, has been outspoken recently about his belief that the Fed is engaging in political manipulation.
Warsh wrote an op-ed in the Wall Street Journal in January predicting that the disinflationary impact of deregulation and spending cuts will likely outweigh any inflationary effect of tariff policies. He also predicted that the Fed would attempt to blame Trump for high inflation.
He stated, “In my time as a governor at the Fed, we would look through one-off price changes,” a viewpoint that Treasury Secretary Scott Bessent recently reiterated regarding the central bank’s approach to tariffs.
According to the Wall Street Journal, Trump discussed replacing Powell with Warsh in February and March, but Warsh cautioned the president against doing so until Powell’s term ended in May 2026.
Trump’s longtime adviser Steve Moore claimed that each time he visits the president, Trump bemoans the fact that he nominated Powell to be Fed chair, among other faults.
Moore stated that although he believes the president should have the power to remove Powell, the likelihood of him doing so is slightly less than 50/50.
Powell said the Fed will “wait for greater clarity” before considering any interest rate adjustments, and that Trump’s tariffs will likely result in “higher inflation and slower growth.” Moore claimed Powell’s remarks last Wednesday were stupid.
“To even pretend he’s politically independent is outrageous,” Moore stated. “It was a completely partisan rant.”
Trump wants Powell to cut interest rates, but it’s still uncertain if he would take action. According to those close to the administration, he has been dissatisfied with Powell’s performance for a while and believes the head of the central bank responded to high inflation under President Biden’s administration too late.
Moore said other names that might be considered behind Warsh include TV anchor and economist Larry Kudlow, who served as the NEC director during the first Trump term, Kevin Hassett, the director of the National Economic Council, and Art Laffer, an economist from the Reagan administration.
In response to a reporter’s question on Friday about whether Powell’s removal was a possibility, Hassett stated, “The president and his team will continue to study that.”
According to reports, Treasury Secretary Bessent has encouraged Trump against terminating Powell’s employment too soon, stating last week that the administration will begin interviewing potential successors “sometime in the fall.” Furthermore, he asserted that the preservation of monetary policy is crucial.
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Fed Governor Chris Waller, who was chosen during Trump’s first term, is another potential Powell replacement that comes up among individuals close to the administration.
Waller’s opinions might be more in line with those of President Trump. According to Waller’s latest speech, if tariffs stay high, economic growth may “slow to a crawl” and the central bank may need to lower interest rates in order to avoid a recession.
He projected that this year’s inflation would rise to over 5%, and even in that case, monetary policy should be loosened because a spike in tariff-related inflation may be “temporary,” allowing Waller to “look through it.”
The Fed governor expects the effects on employment and growth to persist longer.
During a speech this week in St. Louis, he said, “I can hear the howls already that this must be a mistake given what happened in 2021 and 2022,” referring to a time when authorities misjudged the inflation during the COVID-19 pandemic to be temporary. “But just because it didn’t work out once does not mean you should never think that way again.”
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Another unknown is whether Powell’s removal might withstand a judicial challenge.
Each Fed board member will serve for 14 years, according to the law, “unless sooner removed for cause by the President.” The statute does not directly mention the Fed chairman.
The exact meaning of “for cause” remains unclear. The wording in the statute is more limited compared to Cabinet officials and other members of a presidential administration, who are sometimes referred to as operating “at the pleasure” of the president.
Jaret Seiberg, an analyst at TD Cowen, stated that he believes the president is getting closer to defending the dismissal of Democrats from the Federal Reserve board.
The recent dismissal of the two Democrats from the National Credit Union Administration by the president, he added, “tells me that Team Trump believes it has absolute authority to keep Democrats off the boards of the financial regulators even if Congress made those boards bipartisan.”
In the Oval Office last week, Trump informed reporters that he was empowered to fire Powell, whom he had nominated in 2018.
“If I want him out, he’ll be out of there real fast, believe me.”
