Trump Considering New "Shadow" Leader for Federal Reserve

As he tries to get interest rate cuts to boost the economy, President Trump may be on the verge of naming a new leader for the Federal Reserve.

…even as the current leader is still on the job.

“It’s sort of unprecedented,” exclaimed financial planner Richard Rosso.

The president has been butting heads with Fed Chairman Jerome Powell. In the Fed’s customary balancing act between interest rates and inflation, Powell has been reluctant to cut rates even as the president looks for help. 

“We need growth to overcome some of those deficit numbers and, sometimes, yes, lowering rates would help,” Rosso said. “But I just don’t see the Fed making a move.”

Rather than take the extreme step of firing Powell, some observers suspect the president may opt to appoint a “shadow” chairman of the Fed, to push for his desired monetary policy now, and then to take over as chairman once Powell steps down next year.

“Right now, it’s just a lot of talk,” said Rosso, “but what he’s doing is setting the table for who is coming next, and what he expects. That could have a positive effect on markets next year.”

Lower interest rates could help stimulate the economy by making investment easier but the Fed has been reluctant to cut rates. Rosso blames nervousness and uncertainty over the impact of tariffs.

“TDS,” he declared. “They have Tariff Derangement Syndrome. They keep thinking tariffs are going to lead to inflation, and all we’ve seen so far is no inflation.”

Rosso cautioned that a “shadow” chairman for the Fed would technically have little or no power to impact policy “It really doesn’t have any teeth,” he warned. But such a figurehead, effectively a surrogate for the president, could help guide investors as a messenger of policies to come.“Here’s the thing,” he explained. “As we get closer to Powell being out in May of 2026, maybe by this fall, that shadow’s voice is going to get louder. We’ll know what kind of Fed leader is moving in.”