Trump is looking for a successor to terrible Fed chairman Powell – dollar collapses!

Trump is looking for a successor to terrible Fed chairman Powell – dollar collapses!

Amid the turbulent U.S. political and economic landscape, President Donald Trump plans to select a successor to Federal Reserve chief Jerome Powell. This could happen as early as September or October, like that Wall Street Journal reported. Powell was called “terrible” by Trump and pressure on the central bank is mounting while the U.S. dollar has fallen to a three-and-a-half-year low against the euro. The financial uncertainty has caused investors to look for alternatives and caused the dollar to temporarily fall to 0.7990 francs.

Analyst Kieran Williams raises concerns that an early appointment of a new Fed chief could be politically motivated, which would threaten the independence of monetary policy. Trump himself has always emphasized that he wants to remain loyal to his decision not to fire Powell, but his constant criticism and threats have overshadowed the discussion about possible successors. In particular, the lack of clarity as to whether Trump has the right to fire Powell raises questions.

The potential successors

Although there is a lot of interest in Powell's successor, Trump is currently naming three or four candidates. This list includes, among others, Kevin Hassett, a former economic advisor, and Kevin Warsh, a former Fed director. Scott Bessent, who is expected to be Treasury Secretary, and Christopher Waller, a member of the current Fed Board of Directors, are also up for debate. Waller may consider cutting interest rates soon, which could suit Trump.

The speculation about the succession and the resulting political movements appear to have an impact on monetary policy. Analysis shows that the likelihood of rate cuts increased in July, while market observers previously expected a cut in September. In fact, on June 18, the Fed decided to keep the key interest rate stable in the range of 4.25 to 4.5 percent. This move was intended to take into account the uncertainties in the Trump administration's economic policy direction and appears to be in line with analysts' expectations, although the environment remains challenging.

Economic impact

The stability of interest rate policy in the USA has not only national but also global implications. A strong Fed is crucial for financial markets, and the Federal Reserve's decisions can affect the Euro-dollar exchange rate, as well as export and import conditions for companies in German-speaking countries. Forecasts point to moderate economic growth of 1.4 percent and an inflation rate of 3.0 percent, but sustained core inflation remains above the 2 percent target.

Given all these factors, the pressure on the Fed remains high, which will probably also influence the direction in which Trump pushes his developments. Experts agree that the upcoming decisions will be important not just for the US but for the entire global economy. The pressure on the dollar and the current discussions about the central bank promise to remain a hot topic in the future.