Trump considers appointing a successor to the Federal Reserve earlier: measures taken to seek interest rate cuts

This week, Federal Reserve Chairman Jerome Powell easily passed two hearings on Capitol Hill, but now he will face a bigger challenge: US President Donald Trump may soon nominate his own candidate as the next central bank governor, thereby weakening Powell's power.

US President Trump launched the latest round of attacks on the Federal Reserve Chairman he nominated nearly eight years ago at the NATO summit held in The Hague. I think he's very bad, "Trump said at a press conference when asked about his intentions for the next Fed chairman. Subsequently, Trump called Powell very mediocre in intelligence and added that his intelligence level in doing things was very low, and he was very good at political maneuvering. I actually think he's a very foolish person, "Trump said.

This conversation has had an impact on the market: According to data from the Chicago Mercantile Exchange Group, traders accelerated their bets on interest rate cuts this year on Thursday, with a current probability of about 60% of three cuts, while a few days ago, the likelihood of two cuts was still high. In the areas where the Federal Reserve can exert influence, the yield of treasury bond bonds fell sharply, much more than the yield at the long end of the curve. The US dollar has also experienced a significant decline relative to other global currencies. Trump confirmed that he has a potential successor list for Powell, with up to "three to four people," but did not name the final candidate.

And for Trump's tendency to appoint a successor to the Federal Reserve one year in advance, this is clearly due to his disagreement with the current Federal Reserve Chairman Powell's policy attitude and expectations for the future monetary policy stance of the Federal Reserve. Trump has repeatedly accused Powell of being slow to respond to interest rate cuts, which has caused economic losses to the US Treasury Department due to Federal Reserve policies. Therefore, Trump intends to influence Federal Reserve policies, especially the impact on interest rate cuts, starting from the appointment of his successor.

Of course, this approach has also raised some doubts. On the one hand, the decision-making of the Federal Reserve is independent and professional, and announcing a successor in advance may interfere with this process to some extent, and may even cause harm to monetary policy. On the other hand, Trump's move is inevitably interpreted as a lack of trust in Powell's personal abilities, which may further exacerbate the conflict between the president and the chairman.

Some observers believe that Trump's decision will put the financial markets in a "highly unstable" state in the coming months, not only reflected in the fact that he or his successor will continue to hold the nuclear "start" password on the president's desk for the next four years, but also in his influence on the market and the way he communicates with it.

In addition, this decision may also have an impact on the US political arena. The selection of the Federal Reserve Chairman usually requires approval from Congress, and Trump's relationship with Congress is not harmonious. Trump's early decision on his successor is likely to attract opposition and questioning from Congress, further exacerbating political divisions and uncertainty.

Overall, Trump's decision to choose a successor to the Federal Reserve earlier than expected not only reflects his dissatisfaction with the current chairman's policies, but also raises questions about the independence and professionalism of the Fed. The rest of the matter remains to be seen to determine whether this will affect the Fed's policies and market stability.