Market worries about increased political interference; the White House denies plans to accelerate the replacement of the Federal Reserve Chairman

According to Zhitong Finance APP, as market concerns grow over the possibility of Trump taking unconventional measures to undermine the influence of the Federal Reserve Chairman, the White House on Thursday refuted rumors that the appointment of a new Fed Chairman is accelerating.

"Any decisions regarding the replacement of the Fed Chairman are not imminent, but the President certainly has the right to change his mind at any time," a White House official told the media. The official also stated that Trump "has many excellent candidates to consider."

Current Federal Reserve Chairman Jerome Powell's term will end in May next year. If the President announces a successor in advance, the market may interpret this as an attempt to establish a "shadow Fed Chairman." A "shadow chairman" refers to a nominee who, although not yet officially in office, exerts influence on monetary policy behind the scenes. This move could undermine the credibility of the Fed as an independent institution.

As a result of this news, the dollar fell and bond yields declined on Thursday, as investors began to reassess the political intervention risks the Fed may face and the likelihood of a policy shift.

Powell has recently insisted that the U.S. economy is strong enough for the Fed to maintain interest rates while closely monitoring whether the Trump administration's tariff policies will drive up inflation. Meanwhile, Trump hopes to lower interest rates as soon as possible.

Although Powell was nominated by Trump during his first term, the President publicly criticized Powell's performance as "terrible" at the NATO summit this week and stated that he "will soon make a decision on the candidate," adding, "I have narrowed it down to three or four candidates, and he will be leaving soon, thankfully."

Foreign media reported on Wednesday that Trump may announce his nomination as early as this summer. Historically, Fed Chairmen are typically nominated for their successors three to six months before their terms end.

Trump has long pressured Powell to significantly lower interest rates, leading many to expect that he will appoint a new chairman who is more "dovish."

Although the White House has not released a specific list of candidates, several names have been frequently mentioned. According to insiders, former Fed Governor and current Hoover Institution member Kevin Warsh is one of the leading candidates. Warsh is politically sensitive and is believed to communicate well with Trump; he advised the President earlier this year not to directly fire Powell.

Other potential candidates include Fed Governor Christopher Waller, who is dovish and stated last week that the Fed could start cutting rates as early as July if the data is appropriate; Treasury Secretary Steven Mnuchin himself; and White House National Economic Council Director Kevin Hassett.

In the face of market volatility, some Fed officials are trying to calm emotions. Chicago Fed President Charles Evans stated in an interview on Thursday that the new candidate will not affect the Fed's daily decision-making. "Our current Fed Chairman is Powell, who was confirmed by the Senate, and every January the FOMC votes to elect a chairman, and the result is still Powell," he said. "So, how does someone who is not yet chairman view monetary policy? He can have his own opinion; there are already enough opinions in the market."