The dollar hits a 3-year low as Trump might make Powell a Fed lame duck early
Trump could name a replacement for Fed Chair Jerome Powell as early as September or October, even though Powell's term runs for almost another year
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The U.S. dollar hit a three-year low on Thursday after a new report that President Donald Trump is considering an earlier than usual announcement for his nominee to replace Federal Reserve Chair Jerome Powell.
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The Wall Street Journal, citing unnamed sources familiar with the matter, reports that Trump could name a replacement for Powell as early as September or October, even though Powell's term runs for almost another year. That would have the effect of making Powell a lame duck far earlier than usual. Presidents traditionally name nominees to succeed outgoing Fed chairs a few months before their terms end.
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Powell has steadfastly resisted Trump’s demands to lower interest rates, causing an ongoing clash between the two. Trump has repeatedly attacked Powell and thrown names at him. Last week, before the central bank’s most recent decision to keep interest rates steady, Trump called Powell “stupid.”
"He's not a smart person,” Trump said. “I don't even think he's that political. I think he hates me, but that's okay."
The dollar fell 0.5% Thursday and has dropped more than 10% so far this year.
On Wednesday at the NATO summit in the Netherlands, Trump said that he knows “within three or four people” who he will choose as chair. The Journal reports that his announcement could actually come as early as this summer.
“I mean he’s going out pretty soon fortunately because I think he’s terrible,” Trump said at the summit.
If Trump announces his pick early, the incoming chair could influence market expectations of future interest rates, undermining Powell as chair.
Typically, a successor isn’t announced until three to four months before they would take office. Powell still has 11 months left as chair.
Potential candidates for chair, The Journal reports, include former Fed governor Kevin Warsh, National Economic Council Director Kevin Hassett, Treasury Secretary Scott Bessent, former World Bank President David Malpass, and Fed governor Christopher Waller.
The new chair won’t start until May 2026.