U.S. Treasury Secretary Yellen urges Powell to resign from the board after stepping down, Trump clearly seeks a rate-cutting successor

According to the Zhitong Finance APP, U.S. Treasury Secretary Scott Basset recently publicly suggested that Federal Reserve Chairman Jerome Powell should resign from the central bank's board after his term ends in May 2026. In an interview, he stated that traditionally, the Federal Reserve chairman usually resigns from the board simultaneously upon leaving office, and pointed out that if Powell continues to serve as a board member, it may cause confusion in the market.

Currently, Powell's term as a Federal Reserve board member will last until January 2028, which means that even if he steps down from the chairman position next May, he may still participate in monetary policy formulation. Powell has previously avoided questions about whether he would continue to serve as a board member, adding uncertainty to the Trump administration's plans to reorganize the Federal Reserve leadership next year.

Basset revealed that the Trump team has initiated the formal process to determine the next Federal Reserve chairman candidate and emphasized that "there are excellent candidates both inside and outside the Federal Reserve." When asked if he might personally take over, the Treasury Secretary responded that he would "participate in the decision-making process" and stressed that the final decision rests with the president. The market reacted sensitively to this statement, with the yield on U.S. two-year Treasury bonds briefly rising to a session high of 3.93%, and the dollar index also narrowing its decline.

The current Federal Reserve leadership is facing multiple pressures for change. In addition to Powell, board member Adriana Kugler's term will end next January, and Trump has explicitly requested that the successor support interest rate cuts. The president has repeatedly criticized Powell for maintaining interest rates unchanged even after inflation has declined and expressed concerns that his tariff policies may drive up prices.

Although Federal Reserve officials emphasize the need to observe more data before deciding on interest rate cuts, Basset stated in the interview that recent inflation trends have not shown signs of "significant price increases," but also reminded that "one should not overly rely on a single data point."

It is noteworthy that some Republicans are questioning Powell's leadership abilities based on cost overruns in the renovation of two historic Federal Reserve buildings. In response, Basset reiterated Trump's position that he "has repeatedly stated he will not fire Powell," while National Economic Council Director Kevin Hassett cautiously responded that "if there are legitimate reasons, the president certainly has the authority to take action."

Currently, potential successors that the market is paying attention to include former Federal Reserve board member Kevin Warsh, current board member Christopher Waller, and Basset himself, with Waller drawing significant investor interest due to his advocacy for early interest rate cuts.

As of the time of writing, the June Consumer Price Index has been gradually released, with the U.S. core CPI having been below expectations for five consecutive months, and there are no signs of runaway inflation trends. At this time, the direction of Federal Reserve policy continues to affect market nerves. In this complex chess game involving monetary policy, political maneuvering, and market expectations, Powell's next move and the decision-making logic of the Trump administration will become key variables influencing global financial markets