The search for the next leader of the world’s most influential central bank is officially under way, Treasury Secretary Scott Bessent told Bloomberg on Tuesday. “There’s a formal process that’s already starting,” he said when asked about efforts to find Jerome Powell’s replacement as Federal Reserve chair. Powell’s term expires in 2026. In the first public acknowledgement of the much-rumored news about a transition at the Fed, Bessent added, “There are a lot of good candidates inside and outside the Federal Reserve.”

Speaking on “Bloomberg Surveillance,” Bessent also suggested that Powell should consider stepping down from the Fed entirely once his chairmanship ends, arguing that such a move would avoid confusion and maintain market stability. “Traditionally, the Fed chair also steps down as a governor,” Bessent said. “There’s been a lot of talk of a shadow Fed chair causing confusion in advance of his or her nomination. And I can tell you, I think it’d be very confusing for the market for a former Fed chair to stay on also.”

Hours later, JPMorgan Chase CEO Jamie Dimon indirectly rebutted these comments, telling reporters after an earnings conference call, “I think the independence of the Fed is absolutely critical.” In doing so, as The Wall Street Journal reported, Dimon became the first head of a major U.S. financial institution to weigh in on the Trump administration’s pressure on Powell. “Playing around with the Fed can have adverse consequences,” he added, “the absolute opposite of what you might be hoping for.” Dimon has been outspoken as usual recently, making headlines at an event in Ireland last week with comments on matters including Europe’s lack of competitiveness, Trump backing off on some tariffs, and his disagreements with the Democratic Party.

The pressure on Powell

Powell could technically remain on the Fed’s Board of Governors until January 2028. But Bessent’s comments highlight the administration’s desire for a clean break, with a new chair taking the reins and Powell stepping aside entirely. According to Bessent, the White House aims to announce a nominee for the next Fed chair as early as October or November.

The Trump administration — mainly in the form of communications from Trump himself — has made no secret of its desire for a central bank leader more aligned with its preference for lower interest rates and a more accommodative stance. Trump has repeatedly and publicly demanded that Powell “resign immediately,” calling him “very bad for the country” and blaming him for not cutting interest rates as aggressively as Trump desires. He’s resorted to personal insults at times while consistently criticizing Powell’s refusal to lower rates. “Every point [of interest] costs us $360 billion,” arguing that rates should be below 1%.

Through Office of Management and Budget Director Russell Vought, the administration has accused Powell of “gross mismanagement” and “ostentatious” spending on a $2.5 billion renovation of the Fed’s headquarters. Letters from the White House have questioned the legality and necessity of the project, suggesting it could be grounds for removal. Other senior administration officials have weighed in, such as Bill Pulte, the head of the Federal Housing Finance Agency, who stated that Powell’s resignation would be “the right decision for America.”

Trump and his advisers have openly discussed the possibility of firing Powell “for cause,” with some officials suggesting that the headquarters renovation could provide legal justification. One of these is Kevin Hassett, director of the National Economic Council, a name who has been floated as a potential Powell successor. There has also been talk of Trump naming a “shadow chair” before Powell’s term ends, a move that could undermine Powell’s authority and signal a shift in Fed governance. Hassett, when asked in an ABC News interview Sunday whether the president has the authority to fire the Fed chair, said, “That’s a thing that’s being looked into. But certainly, if there’s cause, he does.”

However, Bessent stressed to Bloomberg on Tuesday that Trump has said “numerous times he is not going to fire Jay Powell.” In response to the mounting pressure, Powell has requested an inspector general review of the renovation project and has reiterated his intention to serve out his term.

Who’s in the running?

While Bessent himself has been floated as a possible candidate, he downplayed such speculation, saying to Bloomberg that he’s “part of the decision-making process,” and emphasizing that there are “a lot of good, strong candidates” both inside and outside the Fed. 

Besides Hassett, other names reported as potential Fed chairs include Kevin Warsh, a former Fed governor and Wall Street veteran known for his crisis management experience and close ties to the Trump administration; Michelle Bowman, the current Fed vice chair; and Christopher Waller, a sitting Fed governor, respected for his academic credentials and policy expertise.

Bessent’s remarks sent ripples through financial markets on Tuesday. Yields on two-year U.S. Treasury notes climbed to session highs following the interview, reflecting investor uncertainty about the future direction of Fed policy and the potential for a more dovish successor. And, although Bessent said he had not looked at consumer inflation data due Tuesday morning, it came out as expected, showing a gradual rise in the consumer price index—exactly the kind of data that Powell has cited as a reason for not cutting rates.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.