Decision on nominating next Fed chair not ‘imminent’, White House says

The White House has said a decision on nominating the next US Federal Reserve chief is not “imminent” after a report that Donald Trump could nominate a new chair as soon as this summer knocked the dollar.

“No Federal Reserve chairman decisions are imminent, although the president has the right to change his mind,” the White House said. “The president has many good options for the next Fed chairman.”

The dollar on Thursday fell as much as 0.7 per cent against a basket of its trading partners, including the pound and the euro, hitting a level last reached in early 2022. It later rebounded to trade 0.5 per cent lower.

The move came after a Wall Street Journal report late on Wednesday that said the US president was considering announcing his pick to succeed Powell in September or October, or even as early as this summer. Such a decision would be earlier than usual.

Trump’s on-off tariff announcements now the main threat to global growth

‘The mask is off in tech. You’re getting fired if you speak out’

Child Benefit: Will payments rise for lower income households and what will this mean for wealthier parents?

Powell’s term expires in May 2026, but the US president has become increasingly frustrated at the Fed’s reluctance to cut interest rates amid concerns that tariff policies will trigger another bout of US inflation.

Trump said before the report on Wednesday that he knew “within three or four people” who he was going to pick to head the US central bank, deriding Powell as “terrible”.

Powell has insisted that politics do not play a role in the Fed’s decision-making, which is focused only on reaching the central bank’s mandates of achieving maximum employment and stable prices.

The White House has not confirmed who is in the running, but former Fed governor Kevin Warsh, US treasury secretary Scott Bessent, national economic council director Kevin Hassett and current Fed governor Chris Waller are considered leading candidates.

Waller said last week that he would back a rate cut as soon as July, contrasting with recent remarks by Powell signalling that borrowing costs should remain on hold as policymakers analyse the effects of Trump’s tariffs on growth and inflation.

The US president’s frequent attacks against Powell have revived speculation about Trump nominating his replacement early to serve as a “shadow Fed chair” that would guide markets on what to expect following Powell’s departure next spring.

“A candidate who is perceived as being more open to lowering rates in line with President Trump’s demands would reinforce the US dollar’s current weakening trend,” said MUFG senior currency analyst Lee Hardman.

The euro gained as much as 0.7 per cent against the dollar to $1.174 – its strongest level since September 2021 – after Nato allies in Europe pledged on Wednesday to raise defence spending to 5 per cent of GDP by 2035. The pound rose as much as 0.7 per cent to $1.376.

“The possibility of an early Fed chair announcement is one of the factors pushing the dollar lower today,” said Richard Yetsenga, chief economist and head of research at ANZ.

“On the European side, the confirmation of higher fiscal spending, in this case around defence, is also giving the euro a boost,” he added.

The dollar has weakened more than 10 per cent this year as the anticipated hit from the trade war and growing warnings about the sustainability of the US debt pile mix with concerns about Fed independence.

“The broader backdrop remains one where the perception is the US economy is slowing more quickly than the rest of the world, and that’s been contributing to investor allocation out of the US,” said Yetsenga.

Kelvin Lau, senior economist for greater China and Asia at Standard Chartered, said the possibility of an early nomination for the next Fed chair “has led to the belief that the Fed could shift to an earlier” interest rate cut, weighing on the dollar. – Copyright The Financial Times Limited 2025