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The Trump administration will focus on finding a replacement for Federal Reserve Chairman Jerome Powell this fall, Treasury Secretary Scott Bessent told CNBC on Thursday, adding that officials had “a lot of good candidates.”
Bessent said it was up to the Fed to decide interest rates, although he added that if the central bank did not cut interest rates soon, any potential rate cut in September could be higher.
With the unemployment rate low and inflation above their 2% target, Fed officials have been reluctant to cut interest rates from the current 4.25% to 4.5% range until it is clear that the Trump administration’s tariff plans won’t drive up prices.
President Trump has railed against Powell, a fellow Republican whom he appointed during his first time in office, and again urged him to resign. The president cannot fire Powell over a policy dispute.
Trump administration officials argue that a tax bill that passed in Congress will boost private sector investment and strengthen the US economy, insisting that while tariff increases could result in a one-time bump in prices, they should not drive up inflation over the longer term.
“If they want to make a mistake here and not cut, that’s fine,” Bessent told CNBC, insisting that tariffs imposed by Trump since taking office in January had not fueled inflation “thus far.”
“What we’ve seen so far is that tariff, 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,” Bessent said, citing a rapid market recovery after a 15% decline in April. The selloff came after Trump announced higher than expected tariffs against most US trading partners on April 2.
Based on previous Fed models, he said, the central bank would have already cut interest rates that are “very high real rates.”
Holding off raised the chance that the Fed would need to cut interest rates by more later, said Bessent, who has been named a contender for the Fed chair role.
Two jobs?
Asked if one could head both Treasury and the Fed at the same time, Bessent said that hadn’t been done since the 1930s, but did not explicitly rule out such a solution. Bessent said he was happy in his current job.
The Federal Reserve Act explicitly says “The members of the Board shall devote their entire time to the business of the Board,” which appears to rule out the possibility of Bessent doing two jobs at once.
Trump recently named Secretary of State Marco Rubio to serve as his national security adviser, making him the first person to hold both roles since Henry Kissinger in the 1970s.
Bessent said the administration will work on nominating a Fed chair to succeed Powell in the fall.
“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,” he said.
