Scott Bessent says Jerome Powell should leave Fed board in May '26

NEW YORK: US Treasury Secretary Scott Bessent suggested that Federal Reserve Chair Jerome Powell should step down from the central bank's board when his term as chair is up in May 2026.

"Traditionally, the Fed chair also steps down as a governor," Bessent said in an interview with Bloomberg Television Tuesday. "There's been a lot of talk of a shadow Fed chair causing confusion in advance of his or her nomination. And I can tell you, I think it'd be very confusing for the market for a former Fed chair to stay on also."

Powell's term as a Fed governor doesn't end until January 2028, leaving it possible for him to remain at the central bank - and to participate in monetary policymaking - even after his tenure as the chair comes up next May. Powell has repeatedly declined to answer questions on whether he might stay on as a governor. That reticence has complicated the decision-making for President Donald Trump and his aides as they look to revamp Fed leadership next year.

"There's a formal process that's already starting" with regard to identifying the nominee to become next Fed chair, Bessent also said. "There are a lot of good candidates inside and outside the Federal Reserve."

Asked whether Trump has asked Bessent himself to serve as Fed chair, the Treasury chief said, "I am part of the decision-making process." He noted that "it's President Trump's decision, and it will move at his speed."

Treasuries dropped after Bessent's remarks, with two-year yields hitting a session high of 3.92%. The Bloomberg Dollar Spot Index pared losses and was little changed as of 7:55 a.m. in New York.

Unless Powell makes clear he'll vacate his board position, Trump has one scheduled opening to fill next year, with Governor Adriana Kugler reaching the end of her term in January.