Trump: "Benchmark interest rate should be cut by 3–4 percentage points"

"Fed Chair shortlist narrowed to 3–4 candidates

Powell's successor to be named in advance"

U.S. President Donald Trump is accelerating the process of selecting the next Chair of the Fed. At the same time, he reiterated pressure on the Fed to lower the benchmark interest rate to around 1% per year.

On the 13th (local time), President Trump told reporters at the Kennedy Center in Washington, D.C., "I am considering naming the new chair a bit earlier," and added, "the shortlist of candidates has been narrowed down to 3–4 people." Trump has openly criticized current Fed Chair Jerome Powell for not accepting requests for a rate cut. While he said he would let Powell serve his full term, until next May, he has consistently urged him to resign voluntarily. Bloomberg News pointed out that "naming a successor to the sitting Fed Chair in advance will create a so-called 'shadow Fed'," and "it could confuse investors who must monitor both the current Chair and the incoming Chair's stance."

The search for the next Chair is being led by Treasurer Scott Besant. Once Secretary Besant submits the final shortlist, President Trump is expected to officially announce the chairmanship candidate this fall. In a Bloomberg TV interview the day before, Besant said the government was reviewing up to 11 candidates for the Fed Chair position.

President Trump highlighted that each percentage-point drop in the rate would reduce the annual interest on national bonds by $360 billion, and asserted, "the benchmark rate should be lowered by another 3 to 4 percentage points." He explained that high borrowing costs are hurting U.S. companies, consumers, and homebuyers.

The current U.S. benchmark rate is 4.25–4.5% per year. If Trump’s proposals are followed, it should drop to around 1% annually.

Han Kyungjae, hankyung@hankyung.com