26.06.2025 02:15
The US dollar experienced a sharp decline on Thursday following a Wall Street Journal report suggesting a potential announcement of President Trump's next Federal Reserve chair pick much sooner than anticipated. This unexpected news sparked immediate reactions in Asian markets, causing the dollar to weaken against all major currencies. The report followed Trump's expressed dissatisfaction with current Fed Chair Jerome Powell's handling of interest rates, which he views as insufficiently aggressive in lowering them.
Trump's consideration of an announcement as early as September or October, a full six years ahead of Powell's term expiration in May 2026, is generating significant market uncertainty. The Wall Street Journal article named prominent candidates under consideration, including former Fed Governor Kevin Warsh and current National Economic Council Director Kevin Hassett, both with established connections to Trump's administration. This unprecedentedly early appointment process is already unsettling investors and fueling market volatility.
The President himself recently confirmed to reporters that he is evaluating “three or four” potential replacements for Powell. His public criticism of the Fed's recent decision to maintain interest rates, citing the impact on government borrowing costs and economic growth, has escalated concerns about potential political interference in the central bank's independence. His earlier promise of announcing new names “very soon” further fueled speculation.
The White House's response to the swirling speculation regarding the early appointment remained deliberately ambiguous. While advocating for a growth-oriented monetary policy from the Fed, the official statement avoided directly confirming or denying the impending announcement. Conversely, Chair Powell firmly reiterated the Fed's commitment to maintaining its independence from political influence, emphasizing the long-term consequences of any policy errors. He underscored the gravity of potential mistakes during a recent Senate hearing, highlighting the prolonged negative effects they could have on the economy. National Australia Bank strategist Rodrigo Catril highlighted the potential for significant market instability, suggesting the possibility of a "shadow Fed chair" exerting influence long before Powell's official departure, and predicting further downward pressure on the dollar in the near term.
