Jerome Powell's Tenure as Fed Chair is running out - Treasury Secretary suggests it's time for him to resign
The U.S. economy is currently under the spotlight, with the recent Consumer Price Index (CPI) report revealing an unexpected increase of 2.7%, marking the highest inflation rate in the past five months. This rise in inflation puts more pressure on the Federal Reserve as they navigate the future direction of monetary policy.
The new CPI report serves as a significant indicator of the current state of the U.S. economy. Treasury Secretary Scott Bessent urged people not to panic over the single report, instead focusing on the bigger picture and long-term trend. However, he acknowledged that the surprising increase in inflation could have implications for the Federal Reserve's monetary policy decisions.
Bessent's concerns are not unfounded. President Trump has been openly critical of Federal Reserve Chair Jerome Powell, accusing him of holding back the U.S. economy by refusing to lower interest rates. Trump's discontent with Powell has led to speculations about his potential removal, but Powell remains in office until May 2026.
Amidst the uncertainty surrounding the new Federal Reserve Chair appointment, Bessent has called for Powell to make a clean exit once his term ends. He warned that Powell's continued presence on the Fed's board could confuse markets. There are rumors that President Donald Trump may consider a "shadow chair" to work while Powell is still on the board.
The formal process to find a new Fed Chair has already begun. Treasury Secretary Bessent is searching for several candidates to present to President Trump, with former Federal Reserve Bank of St. Louis president James Bullard being one prominent candidate discussed. The hunt for a new Federal Reserve Chair is official, with President Trump reportedly considering various candidates, both from inside and outside the Fed.
The inflation rate of 2.7% adds to the uncertainty surrounding the new Federal Reserve Chair appointment. Bessent made this statement in a recent interview, emphasising the importance of a smooth transition for the stability of the economy.
As the hunt for a new Federal Reserve Chair continues, it is clear that the choice will be made on President Trump's timeline. The decision will have a significant impact on the future direction of monetary policy and the stability of the U.S. economy.
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