On Thursday, Treasury Secretary Scott Bessent announced on CNBC that the Trump administration will focus on selecting a replacement for Federal Reserve Chairman Jerome Powell in the fall, stating, “We have a lot of good candidates.”
Powell’s term as chair is set to expire in May 2026, and President Donald Trump, who appointed him in 2017, has repeatedly called for his resignation, citing disagreements over monetary policy.
Interest Rate Tensions and Economic Strategy
Bessent emphasized that interest rate decisions remain the Federal Reserve’s domain but suggested that delaying cuts could lead to more significant reductions in September. With the Fed maintaining rates at 4.25% to 4.5%, officials are cautious due to inflation exceeding the 2% target and uncertainties surrounding Trump’s tariff initiatives.
Bessent argued, “What we’ve seen so far is that tariffs haven’t hurt. The dog that didn’t bark was that tariffs are going to hurt the economy, they’re going to hurt markets,” pointing to a market recovery after a 15% selloff following Trump’s April 2, 2025, tariff announcements against major U.S. trading partners.
The administration contends that its recently passed tax bill, which extends the 2017 Tax Cuts and Jobs Act, will drive private-sector investment without fueling long-term inflation, supporting Trump’s vision for a robust economy.
Tariff Policies and Market Dynamics
The administration’s tariff strategy, a hallmark of Trump’s economic approach, has drawn scrutiny for its potential to disrupt markets. However, Bessent’s comments align with analyses suggesting that the tariffs’ impact has been overstated.
A July 2025 report from Bloomberg noted that while Trump’s tariffs initially triggered market volatility, consumer prices have not seen sustained increases, supporting Bessent’s claim that tariffs have not significantly harmed the economy.
The administration’s focus on reducing regulatory burdens and boosting domestic investment, as outlined in recent White House statements, aims to offset any short-term price bumps from tariffs, reinforcing Trump’s commitment to economic self-reliance and job creation.
Federal Reserve’s Role and Independence
Bessent, a potential candidate for the Fed chair role, addressed speculation about holding both Treasury and Fed positions, noting it hasn’t occurred since the 1930s and is barred by the Federal Reserve Act, which states, “The members of the Board shall devote their entire time to the business of the Board.”
He expressed contentment with his current role, saying, “If they want to make a mistake here and not cut, that’s fine,” but warned that the Fed’s high rates, based on historical models, are overdue for adjustment.
The Fed’s reluctance to cut rates stems from concerns over tariff-driven price increases, as noted in a June 2025 Reuters article, which highlighted the central bank’s focus on balancing inflation control with economic growth.
Timing and Administrative Priorities
Bessent explained the delay in selecting a new Fed chair, stating, “We’ve been busy. The president’s been doing peace deals, trade deals, tax deals, and we are landing the plane on all of those. So we’re going to have more bandwidth after Labor Day.”
This reflects the administration’s packed agenda, including a 93.1% reduction in illegal border crossings in June 2025 and the passage of the One Big Beautiful Bill Act, as reported by Fox News.
