Early Fed chief nomination could rattle markets
Published: Updated:
Trump has said he will soon name the next head of the Federal Reserve chief in a move that could rattle financial markets. Such a move would be highly controversial since there is nearly a year left in current chairman Jerome Powell's term.
The independence of the Fed — which sets benchmark interest rates that influence everything from mortgage costs to stock prices — is seen by Wall Street as vital for market stability. An early pick could create a 'shadow' chair alongside Powell, blurring the Fed's message and direction.
'It's coming out very soon,' Trump said of his nomination earlier this month. Confusion about what those might be could upend market Markets respond not just to official Fed decisions, but also to hints about future moves — meaning mixed signals could cause turmoil.
'You're going to have two people trying to steer the ship: One that's actually steering it, and one that's the backseat driver,' Ryan Sweet, chief US economist at Oxford Economics told Reuters. Trump has long criticized Powell for not cutting interest rates aggressively enough, even threatening to fire him during his presidency.
While the president has since reneged on that threat , Wall Street has been unnerved by the President's willingness to push the boundaries of the Fed's independence from the White House. A new Fed chair seen as under Trump's influence would also concern Wall Street.
'Whomever is appointed, the key thing to monitor is whether they are perceived as being a political appointee,' Eric Winograd, chief U.S. economist at AllianceBernstein told Reuters. 'And by that, I mean someone whose views change with the whims of the president.'
Callie Cox, chief market strategist at Ritholtz Wealth Management agreed that the next Fed chair will be crucial. 'Any Wall Street manager would tell you that Fed independence is the golden rule of markets,' Cox told the publication. 'To move away from that can introduce a whole host of issues.'
A wildcard choice for the next chair could also discombobulate the markets. The top candidates are currently White House economic adviser Kevin Hassett; former Fed Governor Kevin Warsh; former Fed board nominee Judy Shelton and Treasury Secretary Scott Bessent, according to Polymarket.
The Fed's 'dual mandate' is to keep inflation low while maintaining a healthy labor market. Economists have warned that Trump's tariffs will raise prices , something that will require interest rates to stay elevated. However, a slowdown in the job market will pressure the central bank's monetary policymaking committee to make a cut.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The National
37 minutes ago
- The National
UK scrambles to charter flights out of Israel for British citizens
Downing Street urged Britons in the region to register their presence with the Foreign Office as the crisis deepens and Keir Starmer called on all sides to reach a diplomatic outcome. Number 10 on Friday morning said that the situation remains 'fast-moving' and would continue to be monitored closely as the Government works with Israeli authorities to ready flights out of Tel Aviv. A spokesman added: 'We are advising British nationals to continue to register their presence in Israel and the Occupied Palestinian Territories, to be contactable with further guidance on these flights. 'The Foreign Secretary will shortly announce that the Government is working with the Israeli authorities to provide charter flights from Tel Aviv airport once airspace reopens.' Foreign Secretary David Lammy said work was underway to provide the flights 'based on levels of demand' from UK citizens when airspace reopens. Land routes out of Israel remain open and British staff are on hand to support UK nationals who have crossed the border, he added. (Image: Nathan Howard, REUTERS) Starmer has also urged Donald Trump (above) to step back from military action against Iran after a series of sabre-rattling posts from the US president on his Truth Social platform. The Prime Minister said there is a 'real risk of escalation' in the conflict, adding that there had previously been 'several rounds of discussions with the US' and 'that, to me, is the way to resolve this issue'. Israeli air strikes reached into the city of Rasht on the Caspian Sea early on Friday, Iranian media reported. Since the conflict erupted last week, at least 657 people, including 263 civilians, have been killed in Iran and more than 2,000 wounded, according to a Washington-based Iranian human rights group. READ MORE: UK's 'Union flag plane damaged' in pro-Palestine RAF break-in Meanwhile, at least 24 people in Israel have been killed and hundreds wounded, according to the Israeli authorities. It remains unclear whether the UK would join any military action, although there has been speculation that US involvement could require using the British-controlled base on Diego Garcia in the Chagos Islands. The B-2 stealth bombers based there are capable of carrying specialised 'bunker buster' bombs, which could be used against Iran's underground nuclear facility at Fordo. Attorney General Lord Hermer (below) is reported to have raised legal concerns about any British involvement in the conflict beyond defending its allies, which could limit the extent of any support for the US if Trump decides to back up Israeli attacks on Iran. Lammy arrived in Geneva on Friday for talks with the Iranian foreign minister and European allies as the UK presses for a diplomatic solution to the conflict. The Foreign Secretary is meeting Abbas Araghchi alongside his counterparts from France, Germany and the EU as he seeks to negotiate a settlement before Trump decides on whether to take military action against Tehran. In a statement read by his press secretary on Thursday, Trump said there was still 'a substantial chance of negotiations' and said he would make a decision on deploying US forces 'within the next two weeks'. Trump had previously said he 'may' join Israeli strikes against Iran and its nuclear programme, but added: 'I may not do it. I mean, nobody knows what I'm going to do.' Friday's meeting with the so-called E3 countries follows Lammy's visit to Washington, where he met US secretary of state Marco Rubio in the White House on Thursday evening to discuss 'how a deal could avoid a deepening conflict'.
Reuters
44 minutes ago
- Reuters
TSX futures rise as US delays decision on direct Mideast involvement
June 20 (Reuters) - Futures linked to Canada's main stock index edged higher on Friday as the threat regarding U.S. military involvement in the Israel-Iran conflict appeared to have been forestalled for now. September futures on the S&P/TSX index were up 0.2% at 07:00 a.m. ET (11:00 GMT). The White House said on Thursday President Donald Trump will decide on whether to join Israel in the war in the next two weeks. Diplomatic efforts are also underway, with the UK, French and German delegates scheduled to meet Iranian officials in Geneva later in the day. In other major developments, Prime Minister Mark Carney said on Thursday Canada could increase counter tariffs on U.S.-produced steel and aluminum if he does not reach a broader trade deal with Trump within 30 days. Earlier this week, Trump and Carney agreed to make a deal in 30 days that could possibly resolve a trade conflict triggered by U.S. tariffs and the subsequent Canadian counter duties. Investors now await Canadian retail sales data for April, due at 8:30 AM ET, to assess whether consumer spending has been resilient in the face of tariff uncertainty. The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE), opens new tab edged lower on Thursday, as the Middle East conflict kept risk appetite in check. The commodity-heavy index, however, was poised for a fourth consecutive weekly rise as heightened tensions in the oil-rich Middle East boosted crude prices and kept safe-haven bullion in demand. Oil prices , retreated on Friday but stayed on track for a third straight weekly advance, while gold dipped and copper fell for the fourth consecutive session. FOR CANADIAN MARKETS NEWS, CLICK ON CODES: TSX market report Canadian dollar and bonds report CA/ Reuters global stocks poll for Canada , Canadian markets directory
The Independent
an hour ago
- The Independent
Trump trolled after claiming there are too many holidays in the US on Juneteenth
President Donald Trump has been mocked on social media after complaining on Juneteenth that the United States has too many public holidays. 'Too many non-working holidays in America,' the president griped on Truth Social on Thursday, offering no other comment on the annual holiday set aside to commemorate the end of slavery in the U.S., brought about by the Emancipation Proclamation of 1862 and its enactment at the end of the Civil War in 1865. 'It is costing our Country $BILLIONS OF DOLLARS to keep all of these businesses closed. The workers don't want it either! Soon we'll end up having a holiday for every once working day of the year. It must change if we are going to, MAKE AMERICA GREAT AGAIN!' The White House did not hold an event to honor Juneteenth this year, an occasion enshrined in American law four decades ago, with Press Secretary Karoline Leavitt stressing that West Wing staffers were at work as usual. 'I'm not tracking his signature on a proclamation today,' she said of the president. 'I know this is a federal holiday, I want to thank all of you for showing up to work. We are certainly here. We're working 24/7 right now.' Rather than mark the day, Trump otherwise posted on his platform about TikTok, Federal Reserve Chairman Jerome Powell, and eliminating taxes on tips. His predecessor, Joe Biden, by contrast, spent the day celebrating at a Black church in Galveston, Texas. But the president's frustration about Juneteenth invited derision in response, with California Democratic Rep. Eric Swalwell asked on X: 'Why didn't he tweet this on Columbus Day?' Journalist Sam Stein also mocked Trump by noting that he 'ran on making Juneteenth a national holiday in 2020' in an attempt to broaden his appeal to Black voters. Pundit Harry Sisson commented: 'Not only is he trying to make you work MORE, but also he's taking an apparent dig at Juneteenth. 'This is coming from the same guy who golfs every weekend. Pathetic.' Another user cheerily wished the president a 'Happy Juneteenth Day!!!!' with a selfie in which he happened to be wearing a matching 'F*** Trump' baseball cap and T-shirt. Despite his annoyance about the abundance of public holidays, Trump himself announced two more just last month, commemorating the signing of the armistice that brought an end to the First World War on November 11, 1918, and the defeat of Nazi Germany on May 8, 1945. However, he was careful to stipulate: 'We will not be closing the country for these two very important holidays because we already have too many holidays in America.' The gesture was criticized because November 11 is already observed as Veterans' Day and because American involvement in the Second World War actually continued until August 15, 1945, when Imperial Japan likewise surrendered, finally bringing a close to the war in the Pacific.
