The Trump administration is set to explore options for a new Federal Reserve Chairman this fall, according to the Treasury Department’s comments to CNBC on Thursday. Officials mentioned having “numerous strong candidates” in mind.
Bessent noted that the decision on interest rates ultimately rests with the Fed. However, he suggested that any potential cuts in September could be more significant if the central bank doesn’t act quickly.
With unemployment low and inflation above the 2% target, Fed officials have been hesitant to reduce interest rates from the current range of 4.25% to 4.5%. This reluctance persisted until it became clear that the Trump administration’s tariff measures would not escalate prices.
President Trump has expressed his discontent with Powell, a Republican he appointed, and has called for his resignation again. However, it’s important to note that the president cannot dismiss Powell simply for disagreeing over policy.
Administration officials have argued that the tax legislation passed by Congress will boost private investment and help fortify the U.S. economy, suggesting that the increased tariffs might lead to temporary price disruptions.
“If they want to cut and make mistakes, that’s fine,” Bessent remarked to CNBC, asserting that the tariffs initiated since Trump’s presidency have not yet spurred inflation. He expressed the view that tariffs haven’t been detrimental: “The ones that haven’t come into play yet will be the tariffs that might hurt the economy and markets,” he added, following Trump’s announcement of unexpectedly high tariffs on many trading partners in April.
According to the previous Fed model, the central bank indicated that interest rates were already quite high, having implemented cuts previously.
Bessent, who has been nominated for a Fed position, seemed to downplay the chance of further rate cuts being necessary.
Two jobs?
When asked about the possibility of leading both the Treasury and the Fed simultaneously, Bessent mentioned that this hasn’t been done since the 1930s but didn’t explicitly rule it out. He affirmed his satisfaction with his current role.
The Federal Reserve Act clearly mandates that board members dedicate their full attention to board activities.
Recently, Trump appointed Secretary of State Marco Rubio, who is now also serving as national security adviser, making him the first to manage both roles since Henry Kissinger in the 1970s.
Bessent confirmed that the administration plans to nominate a new chair for the Fed in the fall to succeed Powell. “We’ve been busy. The president’s working on settlements, trade deals, tax changes, and we’re managing all of that. So, we’ll have more capacity after Labor Day,” he explained.
