Dollar falls to three-year low after report Trump may name next Fed chair early

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"Dollar Declines to Three-Year Low Amid Speculation of Early Fed Chair Announcement by Trump"

Dollar falls to three-year low after report Trump may name next Fed chair early analysis cover image The Guardian 7.4
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Original Article Source: https://www.theguardian.com/business/2025/jun/26/us-dollar-falls-to-three-year-low-after-report-trump-may-name-next-fed-chair-early
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The U.S. dollar has experienced a significant decline, reaching a three-year low as reports emerged that President Donald Trump is contemplating an early announcement regarding his choice for the next Federal Reserve chair. Trump has had a contentious relationship with the current chair, Jerome Powell, expressing his dissatisfaction over the Fed's approach to interest rates. In recent comments, Trump labeled Powell as 'very dumb,' reflecting his frustration with the central bank's perceived hesitance to reduce rates. Traditionally, announcements regarding the successor to the Fed chair occur three to four months in advance of the current chair's term expiration, which is set for next May. However, the Wall Street Journal indicated that Trump might announce a replacement as soon as September or October, which has caused the dollar to drop by 0.5% against a basket of currencies, marking its lowest level since March 2022.

Trump's potential early announcement could allow the new appointee to shape expectations about future interest rates, thereby undermining Powell's authority in his remaining months as chair. This follows Trump's previous criticisms of Powell, particularly in light of the Fed's decision to maintain interest rates during a period of economic uncertainty linked to Trump's tariff policies. The president has hinted at a shortlist of candidates for the position, including former Fed governor Kevin Warsh and National Economic Council director Kevin Hassett. The Fed has consistently emphasized that its decisions are driven by economic data rather than political influence, but Trump's public disdain for Powell raises concerns about the independence of the central bank. As the situation unfolds, the market will be closely watching how these developments impact monetary policy and the overall economy.

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Source URL: https://www.theguardian.com/business/2025/jun/26/us-dollar-falls-to-three-year-low-after-report-trump-may-name-next-fed-chair-early

The dollar has fallen to a three-year low after a report that Donald Trump is considering announcing his choice to succeed the Federal Reserve chair,Jerome Powell, earlier than expected.

The US president has repeatedly clashed with Powell, accusing the central bank chief of being too slow to cut interest rates, calling him “very dumb” inhis latest broadside on Tuesday.

Powell’s term as chair is due to run for another 11 months, until next May, and the announcement of a successor traditionally comes three or four months in advance.

However, theWall Street Journal reportedthat Trump was considering selecting and announcing Powell’s replacement in September or October, sending the dollar down 0.5% against a basket of other currencies to its weakest level since the start of March 2022.

An announcement of a successor could even come as early as this summer, the WSJ reported, given Trump’s frustration with Powell and the Fed, which hasresisted his calls for lower interest rates.

An early announcement of the next Fed chair could allow whoever Trump picks to influence expectations about the path for interest rates, which could undermine Powell during the final months of his term.

Trump has repeatedly voiced his disdain for Powell,calling him “stupid”in advance of the central bank’s most recent interest rate decision this month when it kept rates on hold.

The president told a press conference at the Nato summit in The Hague on Wednesday: “I know within three or four people who I’m going to pick”, when asked by journalists if he had selected Powell’s successor.

Trump is reportedly considering the former Fed governor Kevin Warsh, and the National Economic Council director Kevin Hassett, as well as the USTreasury secretary, Scott Bessent.

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Trump has previously said of Powell: “He’s a political guy who’s not a smart person, but he’s costing the country a fortune.” His attacks on Powell and calls for the Fed to ease monetary policy have raised questions over the central bank’s independence.

The Fed has repeatedly stated it makes decisions based on economic data rather than political interventions. It added that it had kept rates on hold in June amid uncertainty over Trump’s controversial tariff plans, which have caused the central bank to raise its projections for inflation.

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Source: The Guardian