Powell seen as ’lame duck’ Fed Chair as his replacement could be added soon

Investing.com -- The likelihood that Federal Reserve Chairman Jerome Powell will remain in his role after his term expires in May 2026 is growing increasingly unlikely. Recent comments from President Donald Trump and Treasury Secretary Scott Bessent suggest a replacement could be positioned well before Powell’s term officially ends, potentially creating a “shadow Fed Chair” scenario.

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In an interview with Bloomberg TV on Monday, Bessent revealed that the administration is considering appointing the next Fed Chair to a 14-year seat that becomes available in January.

"There’s a 14-year seat opening up in January," Bessent said. "So we’ve given thought to the idea that perhaps that person would go on to become the chair when Jay Powell leaves in May."

Alternatively, Bessent said a new chair could simply be appointed in May, although he noted that would be for a shorter, two-year term.

He added that current members of the Federal Reserve are also under consideration for the role, which he said should help avoid confusion in financial markets.

"I don’t see why there would be confusion," Bessent said. "Obviously, there are people who are currently at the Fed who are under consideration. So why would there be confusion if you add another candidate in January?"

When asked whether he might be named Fed Chair, Bessent deflected: “I will do what the president wants, but I think I have the best job in D.C. We’re making a lot of progress with the president’s leadership.”

Some market watchers believe Powell’s authority is already waning.

“President Trump has succeeded in making Fed Chairman Jerome Powell a ‘lame duck,’” wrote Louis Navellier of Navellier & Associates in a client note Monday, citing increased chatter from Federal Open Market Committee (FOMC) members hinting at a possible rate cut later this month.

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