Looming decision on Jerome Powell’s successor raises fresh questions over rates, credibility and housing
President Donald Trump is poised to name the next Federal Reserve chair as soon as next week, according to Treasury secretary Scott Bessent.
For a housing market still wrestling with affordability and ultra-low inventory, the prospect of a more dovish Trump appointee revives debate over whether cheaper money would truly unlock supply or simply fuel another round of price pressure.
Industry economists have warned that the Fed’s stance matters less than structural shortages and the entrenched lock-in effect that keeps owners from moving, despite recent rate cuts.
“We have four fantastic candidates - it will be up to the president, and I would imagine that he will have an announcement maybe as early as next week,” Bessent said during a press conference at the World Economic Forum in Davos.
In a separate CNBC interview, he added: “My guess is the president will reach a decision, maybe as soon as next week. We’ve had substantial conversations about this. We’ve run a process that started in September - 11 very strong candidates. We’re now down to four candidates. The president has personally met with all of them, and it’s going to be his decision,” Bessent said.
Trump has repeatedly argued that the Fed should slash the policy rate toward 1%, accusing Jerome Powell of “hurting the housing industry very badly.”
Bessent said the White House has criticized Powell not only on policy, but on governance. “Under Chair Powell’s watch, we will have seen between four to six governors and presidents have to resign for ethical issues. That’s out of 19. If that happened at a Wall Street firm, the CEO would be out,” he said.
What a Trump-appointed Fed could mean for housing
A more aggressive cutting cycle under a new chair could initially push down Treasury yields and mortgage coupons, unlocking on-the-cusp refinance borrowers and price-sensitive buyers. But if markets judged the cuts excessive, longer-term yields could rise on inflation concerns, blunting the benefit for originators and brokers.
Powell himself cautioned that the Fed’s tools were limited against structural shortages. “We can raise and lower interest rates, but we don’t have the tools to address a structural housing shortage,” he said, pointing instead to supply constraints and zoning.
Post-Powell bets and industry expectations
Powell’s term as chair is set to end in May 2026, and he has the option of remaining as governor until 2028. In recent months, mortgage professionals viewed a post-Powell Fed as more likely to deliver rate relief after a fractious period of internal debate.
The real test would not be the name Trump unveils, but whether the next chair could cut rates while preserving enough credibility to keep long-term yields, and in turn mortgage rates, anchored.
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