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Donald Trump said he would only choose the new Federal Reserve Chairman, who will cut interest rates.
The president also renewed his attack on current Speaker Jay Powell, describing him as a “stubborn mule” and saying he “loves him to step down if he wishes.” Powell said he will serve a term ending in May 2026.
“Everyone there’s going to have a lower fee,” Trump told reporters in the Oval Office on Friday, referring to his pick as Powell’s replacement. “If I think someone is trying to keep the fees where they are, I won’t try to let them in.”
Trump’s comments show the latest barrage of unprecedented attacks by the US president, who is head of the country’s central bank. He repeatedly denounced the Fed’s decision to stop the cutting cycle that began in 2024 this year and to hold interest rates on hold at 4.25-4.5% this year.
“I think we should pay a 1% fee now,” Trump said. He added that he told his administration “don’t go into debt for more than nine months or so” until the new Fed chair took office. Despite his comments, the Treasury will be selling long-standing bonds over the next two weeks.
Earlier this week, Trump told the White House that there was nothing “immediate” to the Financial Times, but he already had a “three or four names” finalist to run the Fed.
His pressure on Powell led to speculation that he could choose a “shadow fed chair.”
Federal governor Christopher Waller, considered a candidate to replace Powell, quickly supported the rate cuts in July. Kevin Hassett, another candidate who currently leads the National Economic Council at the White House, is also helping to reduce borrowing costs.
Also, US Treasury Secretary Scott Bescent, running, said the two-year Treasury bill yields indicate that the Fed should cut interest rates.
Another candidate, former Fed Gov. Kevin Wahsh, has shown that he believes the central bank’s focus should be in the fight against inflation, suggesting he is more hawkish than the other candidates.
Many believe that shadow strategies can backfire.
“It sounds like a smart idea, but it doesn’t hold up,” said Robert Barbera, an economist at Johns Hopkins University. “The reason is that the Fed is not kingship.”
The Fed Chairman will set interest rates along with 18 other members of the Federal Open Market Committee. There will also be voting for 11 people other than the chair.
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“If the next chair tries to flex a muscle he doesn’t have yet, it will primarily undermine relationships with other committees,” said John Faust, former special adviser to Powell, who is still at Johns Hopkins. “That would reduce the impact of new chairs coming in.”
Ragram Rajan, a University of Chicago scholar who was headed by the Reserve Bank of India, said the Fed’s unique structure, with a central committee supported by 12 private banks, has insulated interest rate setters due to being unfairly influenced by the president’s rhetoric.
“There is ” very little” that a president can do to influence local presidents and other federal governors, Rajan said.
Additional Reports by Kate Duguid in New York
