Former U.S. Treasury Secretary Summers: Trump will nominate mainstream figures to lead the Federal Reserve

According to the Zhitong Finance APP, former U.S. Treasury Secretary Lawrence Summers stated that he expects former President Donald Trump to nominate a mainstream candidate to succeed Federal Reserve Chairman Jerome Powell, despite Trump's criticism of Powell for failing to cut interest rates this year.

Summers said, "I would be very surprised if the choice he makes does not receive recognition from fair observers on both sides." He also mentioned, "I am more confident than some that Trump will make such a decision, thanks to the swift reaction of the financial markets to this news."

Powell's term as chairman will end in May 2026, and Trump stated this month that his choice "will be announced soon." In April of this year, U.S. Treasury Secretary Scott Basset indicated that the timing for interviewing candidates to succeed Powell "will be sometime in the fall." Reports suggest that Basset himself has become a part of the potential candidate list, which also includes former Federal Reserve Governor Kevin Warsh.

Trump criticized Powell and his colleagues again this week for maintaining the benchmark interest rate, stating that rates should be lowered by at least 2 percentage points. At an event on Wednesday, he also joked, "Can I appoint myself as the Federal Reserve Chairman? I would do better than these people."

Summers stated, "My guess is that influenced by not wanting to unnecessarily disrupt market stability, and also by the fact that there are still some voices among Senate Republicans, I bet the president will appoint a respected person as the next Federal Reserve Chairman."

Summers also indicated that Trump's repeated calls for the Federal Reserve to cut interest rates may be more about deflecting responsibility for an economic recession rather than directly trying to influence the Fed's policy.

Summers said, "His approach is that if we experience an economic recession, he can blame it on factors outside of government policy."

Summers also emphasized the role of Trump's policies in the latest economic forecasts released by the Federal Reserve on Wednesday.

Summers noted that although energy costs have decreased this year and the application of artificial intelligence suggests an increase in productivity, the Fed's new forecasts indicate that supply shocks to the economy are negative rather than positive.

He stated, "It is not common for the Fed to raise both inflation and unemployment rate forecasts. So you see supply shocks are about to come. What is it? Tariffs. We are imposing supply shocks on ourselves, which will lead to higher inflation and higher unemployment rates, making the Fed's job even more difficult."