How Bessent Made the Case to Trump Against Firing Fed Chair Powell

Bessent said firing Powell was unnecessary because the economy and markets are doing well

- Brian Schwartz & Nick Timiraos

Treasury Secretary Scott Bessent in recent days privately laid out his case to President Trump for why he believed Trump shouldn't try to oust Federal Reserve Chair Jerome Powell, people familiar with the matter said.

Bessent's reasons for avoiding a messy dispute over Powell's final 10 months as Fed chair focused on a few themes: the possible effects on the economy and markets, the prospect that the Fed is already moving toward cutting interest rates later this year, and the likely political and legal obstacles that such a move would face, these people said.

Bessent said firing Powell was unnecessary because the economy is doing well and markets have responded positively to the president's policies, according to one of the people familiar with the matter. Bessent also reminded Trump that Fed officials have signaled they could cut rates twice before year's end, this person said.

The possibility of the president attempting to fire Powell has been in the air for months, but it exploded into public view again this past week. Trump has repeatedly complained that the Fed needs to cut rates to lower federal debt expenses, and a senior White House official on Wednesday said the president had indicated to GOP lawmakers at a recent meeting he could soon move to fire Powell. Later on Wednesday, Trump told reporters that he wasn't planning to do so.

The episode briefly churned up financial markets. Many investors think attempting to replace central-bank officials over policy disputes could steadily erode the central bank's independence, or its authority to take unpopular steps when necessary to maintain low inflation.

The Wall Street Journal reported in April that Bessent and Commerce Secretary Howard Lutnick advised Trump against attempting to oust Powell when the president publicly mused about the Fed leader's "termination."