Donald Trump's campaign team is exploring strategies to diminish the influence of Federal Reserve Chair Jerome Powell, should Trump reclaim the presidency. Economic advisor Scott Bessent suggested that Congress should appoint a Fed chair-designate well ahead of Powell's term expiration in May 2026, potentially rendering Powell a 'lame duck' during his remaining time in office.
Bessent, who is also considered a candidate for Treasury Secretary in a possible second Trump administration, indicated that creating a 'shadow Fed chair' would undermine Powell's authority. This proposal has reportedly gained traction among Trump’s campaign advisors, although it remains unofficial.
Trump's relationship with Powell soured during his presidency, particularly as Powell resisted pressure to lower interest rates to boost the economy ahead of the 2020 election. The idea of a shadow Fed chair has drawn criticism from financial experts, who warn it could create market confusion regarding monetary policy decisions.
The independence of the Federal Reserve is viewed as crucial for maintaining responsible monetary policy. Comparisons have been made to Turkey, where President Recep Tayyip Erdogan's influence over the central bank has led to rampant inflation and currency devaluation. While Powell has recently been recognized for managing inflation effectively, the Fed's credibility was previously challenged by its misjudgment of inflation dynamics post-pandemic.