Besant's Interview with Bloomberg TV
"Official Process to Nominate Next Fed Chair Has Begun"
Urges Powell to Step Down from Board After Term Ends
On July 15 (local time), U.S. Treasury Secretary Scott Besant announced that the official process to nominate the next Chair of the Federal Reserve (Fed) had begun. He also pressured current Fed Chair Jerome Powell to step down from his remaining position as a board member when his term as Chair ends in May next year.
In an interview with Bloomberg TV that day, Secretary Besant said regarding the nomination of the next Fed Chair, "The official process has already started. There are many excellent candidates both inside and outside the Fed."
When asked whether President Trump had asked him to take the position of Fed Chair, he responded, "I am involved in the decision-making process to some extent," adding, "The decision is up to President Trump, and it will proceed at his pace."
During the interview, Secretary Besant reiterated that Chair Powell must also step down from the board after his term as Chair expires next year. He stated, "Traditionally, the Fed Chair resigns from the board as well," and added, "There has been much discussion that naming a shadow Fed Chair in advance would cause confusion. It would also be very confusing if a former Fed Chair remained on the board."
Powell's term as Chair runs until May 2026. His term as a Fed board member runs until January 2028. This means that even after stepping down as Chair, he could remain as a board member. If Powell retains his board seat, he could continue to influence policy decisions, as he has discussed monetary policy with Federal Open Market Committee (FOMC) members for years. Secretary Besant's remarks reflect these concerns and are interpreted as pressure on Powell to leave the board when his term as Chair ends.
In particular, President Trump and Secretary Besant previously considered the so-called "shadow Fed Chair" plan, aiming to nominate the next Fed Chair early and induce a lame-duck period for Powell, but ultimately abandoned the idea. Secretary Besant's comments highlight that if Powell remains on the board, it could trigger confusion similar to the appointment of a shadow Fed Chair. However, Powell has not yet stated whether he will resign from the board after his term as Chair ends.
President Trump has been increasing pressure on Powell by publicly criticizing him daily for not accommodating his demands to lower the benchmark interest rate. The previous day, Trump said, "I just wish he would lower rates," and added, "I tried to be nice to him, but it was no use." He went on to launch harsh criticism, calling Powell "an idiot and a fool," and demanded that interest rates be lowered to the 0% range.
Recently, the White House also sent an open letter to Powell demanding an explanation for what it called excessive remodeling costs for the Fed's headquarters building. Kevin Hassett, Chairman of the White House National Economic Council (NEC) and a candidate mentioned for the next Fed Chair, was asked whether Powell could be dismissed over this issue. He replied, "An investigation is underway, and if there is cause, the President will do so," hinting at the possibility of Powell's dismissal.
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