Powell dismisses notion of ‘shadow’ Fed chair

NEW YORK — Federal Reserve Chair Jerome Powell is not worried about a so-called “shadow chair” undermining him during the Trump administration.

“I don’t think that’s on the table at all,” Powell said during an onstage interview with journalist and anchor Andrew Ross Sorkin on Wednesday.

The idea of a shadow Fed chair comes from Scott Bessent, President-elect Donald Trump’s pick for Treasury Secretary. During an October interview with Barron’s, the hedge fund manager-turned-political advisor floated the idea of Trump announcing his pick for Fed chair well in advance of Powell’s term expiration in 2026. 

Bessent’s rationale was that the power of forward guidance — through which market participants adjust to future policy moves before they happen — could render Powell powerless in his final year on the job.

During Wednesday’s interview, which was part of the New York Times’ Dealbook Summit, Powell said he expects to have normal relationships with key parts of the Trump administration, including the Treasury Department.

“The Treasury secretary and the Fed chair have had breakfast or lunch together every week for 75 years, and more than that … there’s got to be trust and respect and acknowledgment of the boundaries we have, but a very constructive relationship, because in times of crisis we work much more together under the law,” Powell said. “It’s a very important relationship and … I’m confident we’ll have the same kinds of relationships with the incoming administration.”

Powell declined to discuss some of the comments Trump has made directly about wanting a greater say over monetary policy actions. Powell noted that it is Fed policy not to discuss elected officials. 

Still, the Fed chair extolled the value of the central bank remaining politically independent and free to set policies without interference. 

“What does being independent mean? It basically means we can make our decisions without them being reversed, other than by Congress. We’re created by Congress, we’re not in the Constitution, we’re a creature of statute,” he said. “That’s what independence means and that’s what gives us the ability to make these decisions for the benefit of all Americans at all times, not for any particular party or political outcome.”

Powell also shared how the Fed is approaching Trump’s promises to implement wide-ranging tariffs. He said it is too soon and there are too many unknowns — including the size, scope and duration of the tariffs — to make any specific policy adjustments preemptively, but the Fed is modeling potential outcomes. 

“The decisions we’re making are not about that, they’re about what’s going on in the economy right now,” he said.

On the topic of crypto, which promises to be among the biggest financial policy shifts from the Biden administration to the Trump administration, Powell said the Fed has a narrow role in policing digital asset activity as it intersects with the traditional banking system.

“We try to keep the banking system safe and sound, we regulate and supervise banks, and we would want the interaction between the crypto business and the banks not to threaten the health and well-being of the banks,” Powell said. “The other thing is that, to the extent that anyone is doing that through a bank … if people are buying crypto products and things like that, there’s sort of a consumer protection aspect of it. They would need to understand exactly what it is and that sort of thing. But we don’t regulate it directly and we don’t have that big of a role.”