Dollar falls to three-year low after report Trump may name next Fed chair early

The dollar has fallen to a three-year low following a report that Donald Trump is considering bringing forward the announcement of his choice to succeed the Federal Reserve chair, Jerome Powell.

The US president has repeatedly clashed with Powell, accusing the central bank chief of being too slow to cut interest rates, calling him “very dumb” in his latest broadside on Tuesday.

Powell’s term as chair is due to run for another 11 months, until next May, and the announcement of a successor traditionally comes three or four months in advance.

However, the Wall Street Journal reported that Trump was considering selecting and announcing Powell’s replacement in September or October, sending the dollar down 0.5% against a basket of other currencies to its weakest level since the start of March 2022.

An announcement of a successor could even come as early as this summer, the WSJ reported, given Trump’s frustration with Powell and the Fed, which has resisted his calls for lower interest rates.

An early announcement of the next Fed chair could allow whoever Trump picks to influence expectations about the path for interest rates, which could undermine Powell during the final months of his term.

Trump has repeatedly voiced his disdain for Powell, calling him “stupid” in advance of the central bank’s interest rate decision lat week, when it kept rates on hold.

The president told a press conference at the Nato summit in The Hague on Wednesday: “I know within three or four people who I’m going to pick,” when asked by journalists if he had selected Powell’s successor.

Trump is reportedly considering the former Fed governor Kevin Warsh, and the National Economic Council director Kevin Hassett, as well as the US Treasury secretary, Scott Bessent.

Trump has previously said of Powell: “He’s a political guy who’s not a smart person, but he’s costing the country a fortune.” His attacks on Powell and calls for the Fed to ease monetary policy have raised questions over the central bank’s independence.

The Fed has repeatedly stated that it makes decisions based on economic data rather than on political interventions. It added that it had kept rates on hold in June amid uncertainty over Trump’s controversial tariff plans, which have caused the central bank to raise its projections for inflation.