The U.S. dollar has taken a beating, hitting its lowest level in three years as talk grows that President Donald Trump is preparing to name a new Federal Reserve chief months ahead of schedule.
According to The Telegraph, the president’s plan involves unveiling his pick to replace Jerome Powell as soon as September, creating a so-called “shadow” Fed chair who could set the tone for a major policy pivot before Powell’s term is even up.
The move would break with decades of Washington precedent, where presidents typically keep their powder dry until just before the chair’s term expires to avoid spooking the markets or undermining the Fed’s supposed independence.
Trump, never one for subtlety, has publicly hammered Powell for months, labeling him “terrible” for refusing to slash interest rates on command, and now seems eager to install someone with a softer touch on monetary policy.
By floating names months in advance, Trump’s goal looks simple: pressure the central bank into rate cuts sooner rather than later, especially with the economy sputtering and tariffs rattling Wall Street.
It’s classic Trump—put the fear of a new boss into Powell and see if the Fed blinks. So far, the markets seem to think he might get his way, with rate-cut hopes pushing the S&P 500 higher even as the greenback tumbles.
On Wednesday, Powell told Congress he’s planning to hold rates steady in July, as the Fed waits for the fallout from Trump’s tariff war to shake out, but the damage is already being felt across the economy.
Thursday’s government numbers revealed the U.S. economy shrank 0.5% last quarter—worse than expected and a sharp reversal from late last year, when GDP was still climbing at a 2.4% pace.
Blame is falling squarely on the president’s trade blitz, with businesses rushing to import goods before tariffs hit and consumers tightening their belts as uncertainty reigns.
The market’s message is clear: investors expect the Fed to cut rates, and soon. The dollar index has plunged 10% this year and notched six straight months in the red—its worst run since 2017.
The British pound is now above $1.37 for the first time since 2022, and the euro has climbed close to $1.17, its highest mark in nearly four years. Traders smell blood in the water, and the world’s reserve currency is looking wobbly.
While Powell told the Senate the Fed would “take a careful approach,” he admitted cuts could still come later this year. “If we make a mistake here, people will pay…the cost for a long time,” he warned, though it’s doubtful those words will hold back the president’s push.
According to the Wall Street Journal, Trump is considering a short list of loyalists and market-friendly faces to take over the central bank, including former Fed governor Kevin Warsh, economic adviser Kevin Hassett, ex-World Bank president David Malpass, and current Fed governor Christopher Waller.
Even Treasury Secretary Scott Bessent is said to be in the running, while Trump has previously mused—half-joking, half-serious—about simply firing Powell or naming himself to the job. For now, he’s keeping the guessing game going, saying, “I know within three or four people who I’m going to pick.”
The real risk here isn’t just a rattled dollar or a nervous Fed chair. It’s a president turning central banking into reality TV, and Wall Street into his own cheering section. Buckle up—Washington just put the world’s money on notice.
