A seemingly offhand remark from President Donald Trump has set off a wave of speculation in Washington and on Wall Street about the future leadership of the Federal Reserve.
What To Know: During a Cabinet meeting on Tuesday, Trump accused Fed Chairman Jerome Powell of cutting interest rates in 2024 in order to help the Democrats win the Presidential election
Trump then turned to Treasury Secretary Scott Bessent and said, "I like you better," a comment that many interpreted as a public signal of Bessent's rising likelihood as a potential successor to the current Fed chairman.
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Trump has repeatedly criticized Powell for keeping interest rates "artificially high" and has openly called for his resignation.
Bessent has been careful to downplay the rumors that he could be selected as the next chairman of the Federal Reserve.
“We have a lot of great candidates for the Federal Reserve. I think I have the best job in Washington. I get to interact with the president. The Cabinet that he’s chosen is fantastic, and being part of that Cabinet is the dream of a lifetime for me," Bessent said, per Fox Business.
"But I will go where the president thinks that I am best suited,” he added.
Why It Matters: Some experts and lawmakers have raised concerns about central bank independence if Bessent, a close Trump ally and current Treasury Secretary, were to become Fed chairman.
Bessent's dovish stance on interest rates has fueled optimism among investors that a leadership change could usher in a more accommodative monetary environment.
The sentiment has been reflected in the performance of the SPDR S&P 500 ETF Trust SPY, which has shown resilience and even bullish momentum amid the speculation.
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