The White House on Thursday denied that President Trump is close to announcing a replacement for Fed Chair Jerome Powell – just a day after Trump said he had “three or four people” in mind for the job.
“No decisions are imminent, although the President has the right to change his mind. The President has many good options to nominate as the next Federal Reserve chairman,” a White House official told The Post on Thursday.
The S&P 500 closed near a record high Thursday as US stocks continued to climb, which analysts attributed to a tentative Israel-Iran ceasefire, lower tariff rates, tame inflation data and optimism over interest rate cuts.
During a press conference Wednesday at The Hague following a NATO summit, Trump said: “I know within three or four people who I’m going to pick.”
Those potential picks might include former Fed governor Kevin Warsh, National Economic Council director Kevin Hassett, Treasury Secretary Scott Bessent, former World Bank President David Malpass and Fed governor Christopher Waller, according to the Wall Street Journal.
“I mean he goes out pretty soon, fortunately, because I think he’s terrible,” Trump said of Powell, whose term expires May 2026.
Trump has long taken aim at Powell with scathing rants over his reluctance to slash interest rates, instead leading the central bank with a “wait-and-see” approach.
Trump has toyed with the idea of announcing a replacement for Powell by September or October, the Wall Street Journal reported on Wednesday.
That’s far earlier than the usual three- or four-month transition period, and could give way to a “shadow Fed chair” – an incoming leader with significant sway on the markets.
At least one source said the president could be pushed to make an even-earlier announcement this summer over his frustrations.
And their feud only appears to be worsening, after Trump on Wednesday called Powell a “very average mentally person” with “a low IQ for what he does.”
Mary Daly, president of the Federal Reserve Bank of San Francisco, on Thursday joined several other Fed officials by signaling that a rate cut sometime in the near future is feasible.
“My modal outlook has been for some time that we would begin to be able to adjust the rates in the fall, and I haven’t really changed that view,” Daly told Bloomberg Television.
It’s “increasingly possible” that Trump’s hefty tariffs might not cause a surge in prices, she added.
While the odds of a July rate cut are still low, they have jumped more than 8% over the past week as some Fed officials have signaled that tariffs might not hit inflation as hard as initially expected, according to CME FedWatch, which tracks Fed Funds futures prices.
Chicago Fed President Austan Goolsbee on Thursday said the central bank could resume rate cuts if uncertainty eases and inflation trends toward the Fed’s 2% inflation goal.
“I’m optimistic that we’ve been getting good readings and maybe the impact of tariffs will be held just in their lane, but we want to be sure,” he said.
Fed Vice Chair for Supervision Michelle Bowman boldly came out in support of rate cuts on Monday, saying, “It is time to consider adjusting the policy rate.”
“Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market,” Bowman added.
Fed Governor Christopher Waller suggested Friday that tariffs might cause just a “one-off” increase in inflation, not a longer-term impact.
“We’re in a good spot right now for talking about bringing the rate down,” Waller told CNBC, though he cautioned that the Fed should “start slow.”
Meanwhile on Thursday, the Dow Jones rose 404.41 points, or 0.9%, while the S&P 500 and Nasdaq jumped 0.8% and 1%, respectively.
“A combination of some of the uncertainty is starting to dissipate surrounding the Israel-Iran conflict as the ceasefire seems to be holding for now and the increasing odds the Fed may do a rate cut in the back half of the year are fueling the strength in the markets,” Ken Mahoney, president and chief executive at Mahoney Asset Management, told The Post.
Investors were also optimistic over relatively tame inflation that appears to have escaped Trump’s tariffs for now.
Most economists have forecast much higher inflation later this year as tariffs start to show up in consumer prices.
But there are factors that could offset the impact of levies – like lower oil prices, egg prices and rent and home prices that have remained fairly flat, according to Bill Adams, chief economist at Comerica Bank.
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