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Powell silence on his future complicates Trump Fed chair search
Powell silence on his future complicates Trump Fed chair search

Japan Times

time05-07-2025

  • Business
  • Japan Times

Powell silence on his future complicates Trump Fed chair search

As U.S. President Donald Trump and his advisers begin weighing replacements for Federal Reserve Chair Jerome Powell, they're running into one significant complication: It's not clear that Powell will leave the U.S. central bank next year. The Fed chief has repeatedly declined to say whether he will step down when his four-year term as chair expires in May, or remain on the Fed board — something he could technically do until his tenure as a governor expires in January 2028. The prospect of Powell remaining at the central bank has prompted administration officials to begin planning for multiple scenarios for his replacement, as Trump seeks a chair who will support his economic agenda. The president said Tuesday he has "two or three top choices' to potentially succeed Powell, but declined to name them. In recent weeks, Trump's advisers have even discussed with him the possibility that Scott Bessent could simultaneously serve as Treasury secretary and Fed chair, according to people familiar with the matter. Such a move would be unprecedented since the two roles were separated in 1935, in legislation aimed at giving the Fed a measure of independence. "Any reporting suggesting that the President is considering having Secretary Bessent serve as both Treasury Secretary and Federal Reserve Chairman concurrently is absolutely fake news,' a White House official said. A Treasury spokesperson pointed to Bessent's comments earlier this week on his potential candidacy. "I will do what the president wants, but I think I have the best job in DC,' he said on Bloomberg TV. As the selection for a new Fed leader unfolds, the president has made clear the next chair must be "somebody that wants to cut rates.' Powell has led his colleagues in standing pat this year, saying they need more certainty that Trump's tariffs won't trigger a persistent rise in inflation. When asked about his tenure Tuesday in a panel discussion with fellow central bankers from around the world, Powell said, "I have nothing for you on that.' Powell's circumspection has frustrated some of Trump's advisers, who are taking the silence as an attempt to push back against the president's desire for more influence on monetary policy, according to people familiar with the matter. If he did stay on as a Fed governor, Powell would leave Trump with just one scheduled opportunity to fill a board slot — Gov. Adriana Kugler's, whose term ends in January — until the president's final year in office. Bessent, publicly acknowledging Powell could stay, said in a Bloomberg TV interview Monday one idea would be to fill Kugler's slot with the person who would later be elevated to chair. Choosing an existing governor is another option, he said. On Thursday, he signaled his preference for Powell stepping down completely, saying on Fox Business, "We get to hopefully fill two seats next year.' Powell's coyness has raised speculation that he could stay on the board if Trump picks a nominee who is overly deferential to the president's demands, said Neil Dutta, head of economic research at Renaissance Macro. "That's the leverage Powell has right now by not declaring his intentions.' While Trump has sometimes speculated about firing Powell, a May Supreme Court ruling raised the hurdle for that, without having legal "cause.' Pressure on Powell heated up further on Wednesday, with Trump's housing-finance chief, Bill Pulte, accusing Powell of misleading lawmakers about Fed building renovations. Pulte claimed the issue was sufficient to remove him "for cause,' and the president later posted on social media that Powell "should resign immediately.' The supercharged political environment surrounding the U.S. central bank makes the upcoming chairmanship decision all the more sensitive than it usually is. Typically, Fed chairs retire from the central bank when their terms at the helm end, but the political backdrop has rarely been as tense as today's. Gov. Michael Barr took the step in February of resigning as vice chair for supervision, while remaining on the board — constraining Trump's options for reshaping the board. "The independence of the Federal Reserve is critical to our ability to meet our statutory mandates,' Barr emphasized that month. Christopher Waller, a current governor who was nominated for the Fed board by Trump in his first term, is one option for the chair job. Kevin Hassett, the White House's National Economic Council director and ex-Fed official Kevin Warsh are also top contenders from outside the Fed, people familiar with the matter said. Former World Bank President David Malpass has also been floated. Trump's nominee would need to be confirmed by the Senate, and Republicans' narrow majority means they couldn't lose more than three votes for the pick. Powell has often declined to answer politically tinged questions related to Trump amid the president's steady stream of criticism. "I'm very focused on just doing my job,' Powell said this week when asked about Trump's attacks. "The things that matter are using our tools to achieve the goals that Congress has given us.' Sarah Binder, a professor of political science at George Washington University, said "it's a sort of a defensive mechanism' to forgo specific comment on when he'll leave. "My guess is Powell doesn't see it in his interest, but really in the Fed's interest, to engage with the president at all.' If Powell did remain on the board, he could continue to influence policy decisions made by the 19-person interest-rate setting Federal Open Market Committee, having worked with most members for years. Rate moves are made by majority vote, and it's unclear what sway the new chief might have, especially if the candidate came from outside the current board. "He's developed a lot of loyalty among the governors and Fed staff who I expect would remain loyal to him' if Trump picked a "toady,' Dutta said. "The problem Trump has created for the next chairman is making his desire for rate cuts so obvious that it becomes very challenging for that person. You look like a political stooge.'

Veteran Democrat Jack Lew expresses dismay at US deficit but blames Joe Biden too
Veteran Democrat Jack Lew expresses dismay at US deficit but blames Joe Biden too

Sky News

time03-07-2025

  • Business
  • Sky News

Veteran Democrat Jack Lew expresses dismay at US deficit but blames Joe Biden too

Why you can trust Sky News Jack Lew is as decorated as they come when it comes to US economic leaders from the Democratic side of the aisle having served as President Obama's treasury secretary, and before that as his director of the office for management of the budget (OMB), a role he also held in the Clinton White House, when he was instrumental in the administration balancing the budget in the late 1990s - the last time that has happened. As President Trump's "one big, beautiful bill" makes its way through Congress, Mr Lew expressed dismay at the direction of the US deficit. "The simple rule that in good economic times you ought to come as close to paying your bills in the current sense as possible, certainly not running a deficit more than 3% of GDP, is the right rule." "Then in a bad time, you don't worry about nickels and dimes. You don't worry about a COVID response or a financial crisis response," Mr Lew said on The Master Investor Podcast with Wilfred Frost. "What you can't do is never worry about it because then the hole just gets deeper and deeper and deeper. And that's why we're now looking at a deficit that is going to grow to 6% of GDP with this bill. That's terrible." 2:24 Of course, the deficit, having leapt during COVID-19 at the end of the first Trump administration, did stay elevated through the recent Biden administration, when Lew served as ambassador to Israel, and he said he felt that Biden's Build Back Better Bill was not a great decision. "The reality, the political reality at the time when there was a bill that in my own view was too large, it gave cash to people who were already working at a time when there was a concern about inflation," Mr Lew said. "The political reality was you couldn't get Democrats and Republicans to vote for something without that. If you asked me at the time was the risk of the economy not recovering great enough to take that on, I would have said you can't afford not to come out of COVID strong. "So I didn't think it was a great decision, but I don't think there was an alternative other than doing nothing, and we've seen from experience that the US recovered stronger and better than other countries from COVID, and the inflation is running its way through the system." Need for compromise Giving insights on how to balance the budget, he spoke about the need for political compromise. "I've always been able to convince most of the wisdom and the benefit of the compromise. And I work for presidents who were able and willing to make that case. "As in everything else in life, relationships matter deeply. Having a counterpart that you know and that you've worked with in the past and knows that they can trust you and you can trust them gives you the freedom to explore ideas that might actually work, but if they were prematurely made public, would be potentially very painful to either or both sides. So you have to have a space that you can talk about middle grounds in that isn't totally off limits or poisoned." Ruefully, he added, "there's no bipartisan conversations going on". An economy 'doing ok' Despite being down beat about the Trump administration's economic policies he acknowledged that "the US economy is actually doing ok", and was reassured that despite a 10% fall in the dollar so far this year, which he puts down to "policy chaos in the US", the bond market appeared calm to him - for now at least. "The economy is not yet in a place where it's in distress." But, "I think we have to be careful. Right now, I think we're in a place where there's no alternative to the dollar, which is why you're not seeing more departure from the dollar", he added. "The renminbi is not in a place where it's fully convertible and market-controlled. There's not enough high-rated European debt to meaningfully replace the dollar. "Japan mostly is a domestic lending and borrowing market. So I have always been of the view that the fact that it's not there now does not mean we should take for granted that the US dominance will be perpetual."

Powell Silence on His Future Complicates Trump Fed Chair Search
Powell Silence on His Future Complicates Trump Fed Chair Search

Yahoo

time03-07-2025

  • Business
  • Yahoo

Powell Silence on His Future Complicates Trump Fed Chair Search

(Bloomberg) -- As President Donald Trump and his advisers begin weighing replacements for Federal Reserve Chair Jerome Powell, they're running into one significant complication: It's not clear that Powell will leave the US central bank next year. NYC Commutes Resume After Midtown Bus Terminal Crash Chaos Struggling Downtowns Are Looking to Lure New Crowds Massachusetts to Follow NYC in Making Landlords Pay Broker Fees What Gothenburg Got Out of Congestion Pricing Foreign Buyers Swoop on Cape Town Homes, Pricing Out Locals The Fed chief has repeatedly declined to say whether he will step down when his four-year term as chair expires in May, or remain on the Fed board — something he could technically do until his tenure as a governor expires in January 2028. The prospect of Powell remaining at the central bank has prompted administration officials to begin planning for multiple scenarios for his replacement, as Trump seeks a chair who will support his economic agenda. The president said Tuesday he has 'two or three top choices' to potentially succeed Powell, but declined to name them. In recent weeks, Trump's advisers have even discussed with him the possibility that Scott Bessent could simultaneously serve as Treasury secretary and Fed chair, according to people familiar with the matter. Such a move would be unprecedented since the two roles were separated in 1935, in legislation aimed at giving the Fed a measure of independence. 'Any reporting suggesting that the President is considering having Secretary Bessent serve as both Treasury Secretary and Federal Reserve Chairman concurrently is absolutely fake news,' a White House official said. A Treasury spokesperson pointed to Bessent's comments earlier this week on his potential candidacy. 'I will do what the president wants, but I think I have the best job in DC,' he said on Bloomberg TV. As the selection for a new Fed leader unfolds, the president has made clear the next chair must be 'somebody that wants to cut rates.' Powell has led his colleagues in standing pat this year, saying they need more certainty that Trump's tariffs won't trigger a persistent rise in inflation. When asked about his tenure Tuesday in a panel discussion with fellow central bankers from around the world, Powell said, 'I have nothing for you on that.' Powell's circumspection has frustrated some of Trump's advisers, who are taking the silence as an attempt to push back against the president's desire for more influence on monetary policy, according to people familiar with the matter. If he did stay on as a Fed governor, Powell would leave Trump with just one scheduled opportunity to fill a board slot — Governor Adriana Kugler's, whose term ends in January — until the president's final year in office. Bessent, publicly acknowledging Powell could stay, said in a Bloomberg TV interview Monday one idea would be to fill Kugler's slot with the person who would later be elevated to chair. Choosing an existing governor is another option, he said. On Thursday, he signaled his preference for Powell stepping down completely, saying on Fox Business, 'We get to hopefully fill two seats next year.' Powell's coyness has raised speculation that he could stay on the board if Trump picks a nominee who is overly deferential to the president's demands, said Neil Dutta, head of economic research at Renaissance Macro. 'That's the leverage Powell has right now by not declaring his intentions.' Pressure Rises While Trump has sometimes speculated about firing Powell, a May Supreme Court ruling raised the hurdle for that, without having legal 'cause.' Pressure on Powell heated up further on Wednesday, with Trump's housing-finance chief, Bill Pulte, accusing Powell of misleading lawmakers about Fed building renovations. Pulte claimed the issue was sufficient to remove him 'for cause,' and the president later posted on social media that Powell 'should resign immediately.' The supercharged political environment surrounding the US central bank makes the upcoming chairmanship decision all the more sensitive than it usually is. Typically, Fed chairs retire from the central bank when their terms at the helm end, but the political backdrop has rarely been as tense as today's. Governor Michael Barr took the step in February of resigning as vice chair for supervision, while remaining on the board — constraining Trump's options for reshaping the board. 'The independence of the Federal Reserve is critical to our ability to meet our statutory mandates,' Barr emphasized that month. Christopher Waller, a current governor who was nominated for the Fed board by Trump in his first term, is one option for the chair job. Kevin Hassett, the White House's National Economic Council director and ex-Fed official Kevin Warsh are also top contenders from outside the Fed, people familiar with the matter said. Former World Bank President David Malpass has also been floated. Powell's Influence Trump's nominee would need to be confirmed by the Senate, and Republicans' narrow majority means they couldn't lose more than three votes for the pick. Powell has often declined to answer politically tinged questions related to Trump amid the president's steady stream of criticism. 'I'm very focused on just doing my job,' Powell said this week when asked about Trump's attacks. 'The things that matter are using our tools to achieve the goals that Congress has given us.' Sarah Binder, a professor of political science at George Washington University, said 'it's a sort of a defensive mechanism' to forgo specific comment on when he'll leave. 'My guess is Powell doesn't see it in his interest, but really in the Fed's interest, to engage with the president at all.' If Powell did remain on the board, he could continue to influence policy decisions made by the 19-person interest-rate setting Federal Open Market Committee, having worked with most members for years. Rate moves are made by majority vote, and it's unclear what sway the new chief might have, especially if the candidate came from outside the current board. 'He's developed a lot of loyalty among the governors and Fed staff who I expect would remain loyal to him' if Trump picked a 'toady,' Dutta said. 'The problem Trump has created for the next chairman is making his desire for rate cuts so obvious that it becomes very challenging for that person. You look like a political stooge.' --With assistance from Catherine Lucey. (Updates with Bessent comment on two Fed slots, two paragraphs before 'Pressure Rises' subheadline.) SNAP Cuts in Big Tax Bill Will Hit a Lot of Trump Voters Too America's Top Consumer-Sentiment Economist Is Worried How to Steal a House China's Homegrown Jewelry Superstar Pistachios Are Everywhere Right Now, Not Just in Dubai Chocolate ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

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