Trump Just Said He Won’t Replace Fed Chair Powell. What’s Next?

President-elect Donald Trump said he won’t replace Fed Chair Jerome Powell, but that may not keep them off the collision course they seem on.

In an interview aired Sunday on NBC’s “Meet the Press,” Trump said he would not replace Powell, whom he appointed in 2017.

Trump has threatened to fire the central banker since his first administration. During his latest campaign, the then-candidate’s team even suggested the president should take a direct role in the Fed’s interest rate decisions, setting up some conflict since Trump’s election.

Powell has said he would not step down as chair if asked and has defended the need for the Fed to remain independent. He will likely be asked the central bank’s expectations for the Trump administration in his press conference following the Fed’s Dec. 18 policy meeting.

What’s Next for Trump and Powell?

Even if Trump does not attempt to remove Powell, the pair may still be on a collision course.

During the campaign, those close to Trump drafted a plan that would allow the president to be consulted on monetary policy decisions before they are made. Trump has made no public mention of these plans since being elected. Still, economists have said politicians’ interference in monetary policy decisions has resulted in higher inflation worldwide.

Powell has said that Congress has continually supported the central bank’s independence.

Some in Trump’s camp have also suggested that he could appoint a “shadow chair” by announcing Powell’s successor in advance of the end of his term in 2026. Powell dismissed that notion at a conference last week.

Trump could also shape the Federal Reserve’s policy through other appointments. Barring any resignations, Trump’s first opportunity to appoint a governor would be in early 2026, when Adriana Kugler’s term ends. That same year, Michael Barr’s time as vice chair for supervision will end, as will Powell’s chairmanship. Both men’s terms on the board of governors extend beyond those roles, but Trump could appoint new leadership at that time.