Jerome Powell's replacement soon? Trump hints at potential new Fed chair, says rate cut will be litmus test

US President Donald Trump said he would evaluate any new Federal Reserve chair based on whether they would move quickly to cut interest rates, signaling a clear expectation for his eventual nominee to take a more aggressive easing stance.

Asked by Politico whether an immediate rate cut would serve as a litmus test, Trump responded: “Yes.”

He then added that current Fed Chair Jerome Powell should do the same.

“Yes. Well, this guy too ... should too,” Trump said in an interview released on Tuesday (December 9).

Fresh criticism of Powell

Trump coupled his comments with fresh criticism of Powell, whom he originally appointed in 2018.

“I think he’s a combination of not a smart person and doesn’t like Trump,” the President said.

Powell’s term as Fed chair ends in May 2026, though he remains a Governor until 2028. The Fed is widely expected to lower its benchmark rate by 25 basis points in the decision due Wednesday, moving down from the current 3.75% to 4% target range.

Pressure for rate cuts

Earlier this year, Trump repeatedly urged the central bank to cut rates. His latest remarks signal continued pressure on monetary policy as he prepares to select the next Fed leader.

Shortlist of candidates

Trump has said he has already chosen his preferred candidate but may wait until early next year to announce the decision.

Finalists under consideration include:

-Kevin Hassett, White House National Economic Council Director

-Fed Governors Christopher Waller and Michelle Bowman

-Former Fed Governor Kevin Warsh

-Rick Rieder, BlackRock’s chief investment officer for global fixed income