Dollar Weakens as Trump Considers Early Announcement of New Fed Chair
Published 26 June 2025
Highlights
- The US dollar weakened as President Trump considered announcing a new Federal Reserve chair earlier than expected.
- Trump has criticized current Fed Chair Jerome Powell for not lowering interest rates, calling him "terrible" and "very dumb."
- Potential candidates for the Fed chair position include former Fed governor Kevin Warsh and US Treasury Secretary Scott Bessent.
- The pound reached a near four-year high against the dollar amid concerns over the Fed's independence and potential economic impacts.
- The Federal Reserve has maintained interest rates amid uncertainties over Trump's tariff policies, which could affect inflation.
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Rewritten Article
Dollar Weakens as Trump Considers Early Announcement of New Fed Chair
The US dollar has experienced a significant decline, reaching its lowest point in three years, following reports that President Donald Trump may expedite the announcement of a new Federal Reserve chair. The speculation has caused market jitters, with the pound rising to its highest level against the dollar in nearly four years, surpassing $1.37.
Trump's Criticism of Powell
President Trump has been vocal in his dissatisfaction with current Fed Chair Jerome Powell, criticizing him for not reducing interest rates. Trump's frustration with Powell's monetary policy decisions has led to speculation that he might announce Powell's successor as early as September or October, well ahead of the traditional timeline. Powell's term is set to end in May 2026, but Trump's impatience with the Fed's stance on interest rates has fueled rumors of an early replacement.
Potential Candidates for Fed Chair
Among the names being considered for the role of Fed chair are Kevin Warsh, a former Fed governor, and Scott Bessent, the current US Treasury Secretary. Trump has expressed admiration for Warsh, describing him as "very highly thought of." Bessent, meanwhile, has stated his willingness to support the President's agenda, adding to the speculation about his potential candidacy.
Impact on Markets and Economic Policy
The prospect of a new Fed chair sympathetic to Trump's economic policy has raised concerns about the central bank's independence. Academics and market analysts warn that undermining the Fed's autonomy could lead to increased borrowing costs if investors demand higher interest rates. The Federal Reserve has maintained its interest rates this year, citing uncertainties over Trump's tariff policies, which could drive inflation.
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Scenario Analysis
If President Trump proceeds with an early announcement of a new Fed chair, it could significantly impact both domestic and international markets. An appointee perceived as aligned with Trump's economic views might lead to shifts in monetary policy, potentially affecting inflation and interest rates. This move could also spark debates about the Federal Reserve's independence, a cornerstone of its credibility. Experts suggest that maintaining confidence in the Fed's autonomy is crucial for economic stability. As the situation unfolds, market participants will closely monitor any developments, particularly regarding Trump's choice of successor and its implications for future economic policy.
The US dollar has experienced a significant decline, reaching its lowest point in three years, following reports that President Donald Trump may expedite the announcement of a new Federal Reserve chair. The speculation has caused market jitters, with the pound rising to its highest level against the dollar in nearly four years, surpassing $1.37.
Trump's Criticism of Powell
President Trump has been vocal in his dissatisfaction with current Fed Chair Jerome Powell, criticizing him for not reducing interest rates. Trump's frustration with Powell's monetary policy decisions has led to speculation that he might announce Powell's successor as early as September or October, well ahead of the traditional timeline. Powell's term is set to end in May 2026, but Trump's impatience with the Fed's stance on interest rates has fueled rumors of an early replacement.
Potential Candidates for Fed Chair
Among the names being considered for the role of Fed chair are Kevin Warsh, a former Fed governor, and Scott Bessent, the current US Treasury Secretary. Trump has expressed admiration for Warsh, describing him as "very highly thought of." Bessent, meanwhile, has stated his willingness to support the President's agenda, adding to the speculation about his potential candidacy.
Impact on Markets and Economic Policy
The prospect of a new Fed chair sympathetic to Trump's economic policy has raised concerns about the central bank's independence. Academics and market analysts warn that undermining the Fed's autonomy could lead to increased borrowing costs if investors demand higher interest rates. The Federal Reserve has maintained its interest rates this year, citing uncertainties over Trump's tariff policies, which could drive inflation.
What this might mean
If President Trump proceeds with an early announcement of a new Fed chair, it could significantly impact both domestic and international markets. An appointee perceived as aligned with Trump's economic views might lead to shifts in monetary policy, potentially affecting inflation and interest rates. This move could also spark debates about the Federal Reserve's independence, a cornerstone of its credibility. Experts suggest that maintaining confidence in the Fed's autonomy is crucial for economic stability. As the situation unfolds, market participants will closely monitor any developments, particularly regarding Trump's choice of successor and its implications for future economic policy.
