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President Trump's consideration of naming a "shadow chair" for the Federal Reserve before Jerome Powell's term ends is causing concern. Experts warn this could create market chaos by introducing conflicting messaging and undermining the Fed's independence. A shadow chair could potentially jawbone markets but risks exacerbating confusion and weakening policy transmission. The move could also damage the dollar and Treasury bonds, while increasing the bar for rate cuts. While Treasury Secretary Bessent hinted at a potential January appointment for a new chair, the idea of a shadow chair remains controversial.

Prepared by Christopher Adams and reviewed by editorial team.