Paul Donovan from UBS Global Wealth Management says Jerome Powell might stay on as a Fed governor after his Chair term ends next year.

Washington

Recent commentary suggests the Federal Reserve is likely to consider interest rate cuts in the second quarter of next year, primarily due to the economic impact of ongoing trade tariffs. The discussion also addresses the potential for changes in Fed leadership, with concerns raised about maintaining central bank independence and the rule of law.

Analysts note that regardless of who leads the Fed, the economic burden from tariffs may necessitate rate cuts. There is also debate about the possible removal of the current Fed chair and the implications for market confidence, emphasizing the importance of perceived independence for the central bank.

Fed will look to cut rates Q2 next year due to tariff impact

We've had Treasury Secretary Scott Besant in the last couple of days saying the little key has to be advised the president, maybe not such a good idea to try to get this guy out before the term ends in May, just let it roll along, let it happen naturally as it were, because they're already, if I'm not mistaken, I think two of Trump's people on the FOMC already, and I think you've got a couple of seats that are going to come open, and I think the strategy could be to look for it to happen naturally, so they have a majority of their people, as it were. Does that make sense to you, and is that what is likely to happen, do you think? Well, so I think there's a stumbling block or two there. So I think it would be very, very unwise to try and remove the Fed chair before their term is up. Aside from anything else, it's not just the question of central bank independence, it's also the question of rule of law in that situation, because I don't think there is something which would be presented as a credible legal justification for removing, yes, exactly. And so in that situation, if you're starting to say, well, maybe the rule of law doesn't hold in the United States, do you really want to be holding your reserve assets in somewhere where the rule of law is questionable? Maybe not. So I think on many levels, that would be problematic. Now the issue here, one of the big questions is, does Powell resign as a governor as well as Fed chair? Because he's got until 2028 as a governor, he can stay on as a governor, and so the fact that he is almost certainly going to lose the role of Fed chair means he may not have to resign as a governor. He may choose to stay on. Interestingly, we have all this furore about the cost of renovating the Eccles Building in Washington. The Eccles Building is named after a Fed chair who stayed on in office after he lost his position as Fed chair. He remained as a governor. So Powell may not disappear. He may still be around on the FOMC. You've made comments about how it would not be useful if the next Fed chair ended up being somebody like Arthur Burns, who was the Fed chair during the Nixon administration, right? Because on the surface, he would be, I guess, acceptable. But in actual fact, he would end up being simply just literally a spokesperson for somebody like Trump. Exactly. So we've got a spectrum here. You've got somebody completely independent, a Bernanke, a Yellen, somebody like that. Markets will love that. Complete political stooge, absolute political puppet. Again, that's not so damaging because the FOMC will just ignore them. If you put a complete idiot in charge of the Federal Reserve, then the rest of the Fed will just outvote them, and then they've got very little influence. The thing about Arthur Burns was he had been critical of Nixon and had criticized several aspects of his policy. But at the end of the day, when you look at the Fed minutes, the detailed Fed minutes from that period, and you look at the transcripts from the White House, the Oval Office meetings, basically, Burns was just parroting what Nixon had told him to say. And so he had this superficial air of independence, so the Fed didn't oppose him, or at least not until very late in the day. But then he was actually just a political mouthpiece. That would be the worst-case scenario, I think, for financial markets. What about the frontrunner right now, who seems to be Kevin Warsh? So that's an interesting question because, of course, he has been a governor. He's used to the institution. I think he possibly understands the need to build a consensus and so on and so forth. I may not agree with his economic ideas. I rarely agree with other economists. But there's an issue there where I think he probably has enough institutional gravitas that he would continue to assert the independence of the Fed. He may well be advocating for rate cuts, but he knows he's got to bring the rest of the committee along with him. And I think, to be honest, by the time we're talking about in April, May of next year, we are going to be looking at rate cuts anyway, because by that point, I think the weakening of the U.S. economy under the burden of these trade taxes is going to be sufficient that the Fed will be then looking to cut, almost regardless of who is chair. You know, the rule of law, I'm not going to say that Trump is going to try to weaponize the law, although a lot of people think he is already in many different instances. But at the sole issue of firing Powell for cause, which is the only reason that he could, this whole thing about the Eccles building, right, cost overrun, $700 billion. He could actually end up getting Powell on a technicality like that where, yes, I mean, legally he is on the wrong side of the law. What happens then? Well, so the thing is, you're building costs overrun all the time. I've got building work going on at home at the moment, and the builders seem to go to sleep every night dreaming up ways of adding zeros to the cost sheet. So this is something that happens all the time, and I think it would be very, very difficult given that two-thirds of federal building projects have overrun in costs in the last few years. Very, very difficult to argue this in a credible way. Now, he might be able to argue and get away with it legally. It doesn't matter legally. The whole thing about central banks is its confidence, its perception. If markets don't have confidence that the central bank is being treated as an independent institution, if they don't perceive the central bank as acting independently, then restoring that confidence is not something that happens overnight. That takes years, maybe even decades to achieve. So that, I think, would be the issue. I mean, look how long it took Volcker to restore credibility to the Federal Reserve after Arthur Burns and the damage that had happened in the 1970s. I don't think that this is something that, you know, saying you've got cause and actually having cause, that distinction really matters. Okay, trust, hard to build, easy to destroy. I get the point.

U.S. President Donald Trump touted new trade agreements with Japan, Indonesia and the Philippines ahead of his looming August 1 global tariff deadline. CBS News' Natalie Brand has the latest from the White House.

Global Tariffs

Trump touts new trade deals with Japan, Indonesia, Philippines

Newly released video shows Jacksonville deputies pulling William McNeil Jr. from his car during a February traffic stop, leaving him with a concussion and chipped tooth. Warning: This report contains disturbing images.

Jacksonville

Jacksonville police under scrutiny after violent arrest

As Bryan Kohberger faces sentencing for the University of Idaho murders, families and investigators are breaking their silence. The gag order has been lifted, prompting emotional impact statements and new revelations from officials involved in the case.

Boise

Officials, families break silence as Bryan Kohberger sentencing begins

U.S. President Donald Trump accused former President Barack Obama of "treason" on Tuesday, accusing him, without providing evidence, of leading an effort to falsely tie him to Russia and undermine his 2016 presidential campaign.

Trump accuses Obama of treason in attacks over 2016 Russia probe

Ukrainian President Volodymyr Zelenskyy is facing backlash over a bill he signed Tuesday night, which activists say weakens the country's anti-corruption watchdog agencies. Protests broke out in Kyiv on Wednesday over the legislation.

Kyiv

Ukraine Invasion

Ukrainians react after Zelenskyy signs controversial bill

President Donald Trump announced a long-awaited trade agreement with Japan on Tuesday night, a framework between the allies and major trading partners that appeared elusive just weeks ago.

Trump announces U.S.-Japan trade deal

The Syrian defense ministry said it was aware of reports of "shocking violations" by people wearing military fatigues in the country's predominantly Druze city of Sweida, and said it would launch an investigation. That came after fighting between Druze militia and government forces sent to the city to quell the unrest has led to hundreds of people killed.

As Suwayda

Middle East Conflict

Syria to probe 'shocking violations' in Sweida after hundreds killed

The U.S. Olympic & Paralympic Committee changed its eligibility rules on Monday, effectively barring transgender women from competing in Olympic women's sports. CBS News correspondent Elise Preston has more.

USOPC effectively bars transgender women from women’s sports

President Donald Trump says he's reached a trade deal with Japan that will set tariffs on Japanese imports at 15% and see Japan invest $550 billion into the U.S.

Trump says he's reached trade deal with Japan

Photos from Trump’s 1993 wedding and video footage from 1999 Victoria’s Secret fashion show shed light on the Trump-Epstein relationship.

New York

Photos show Jeffrey Epstein attended Trump’s wedding in 1993

Trump announced a new 19% tariff rate for goods from the Philippines after what he called a "beautiful visit" by Philippine President Ferdinand Marcos Jr. to the White House, and said U.S. goods would pay zero tariffs.

Trump says U.S. will charge 19% tariff on goods from Philippines

Deputy Attorney General Todd Blanche, who represented President Trump in his "hush money" case, announced he plans to meet with Jeffrey Epstein's former girlfriend and co-conspirator, Ghislaine Maxwell, as the push to release files related to Epstein's trafficking case continues.

Deputy attorney general seeks interview with Ghislaine Maxwell

Ozzy Osbourne, the hellraising frontman of Black Sabbath and reality TV star, has died aged 76. CNN’s Stephanie Elam looks back at the legendary career as the Godfather of Heavy Metal.

Los Angeles

Legendary singer Ozzy Osbourne dies at 76

A SkyWest flight, operating as a Delta connection, with 80 people on board made a sharp maneuver to avoid a B-52 bomber flying over the North Dakota State Fair. The FAA is investigating how the aircraft came so close.

Minot

Investigation underway after jet narrowly avoids Air Force bomber

A judge on Monday sentenced ex-Louisville police officer Brett Hankison to 33 months in prison and three years of subsequent supervised release, following the 2020 shooting death of Breonna Taylor.

Louisville

Judge sentences ex-officer in Breonna Taylor raid to nearly 3 years

A six-week-old infant and three other children have died of starvation in Gaza in the past 24 hours, local health officials said, with malnutrition and starvation now killing Palestinians faster than at any point in the 21-month war. This video includes images some may find distressing.

Jerusalem

Medics say four Gaza children starve to death in hunger crisis

Ukrainian President Volodymyr Zelenskyy said Ukraine and Russia will hold a new round of peace talks on Wednesday. The announcement comes as Russian drones hit parts of Ukraine, officials said.

Zelenskyy says Russia, Ukraine to hold new round of peace talks

The Trump administration released thousands of records related to the assassination of Dr. Martin Luther King Jr., despite objections from his family. CBS News' Weijia Jiang has the latest.

Trump admin releases Martin Luther King Jr. assassination records

Students gather to protest in Bangladesh outside the school where a military jet crashed Monday, killing at least 30 people, including dozens of children.

Dhaka

Protests break out as death toll passes 30 in Bangladesh jet crash

CBS News has learned that a new assessment of the U.S. strikes on Iranian nuclear sites in June finds that only one of three facilities was possibly destroyed. CBS News senior national security correspondent Charlie D'Agata has the details.

Tehran

U.S. strikes may have destroyed one Iranian nuclear facility

For the first time, Taiwan has combined two major civil defense exercises and staged them in conjunction with its largest-ever military simulation. CNN’s Will Ripley explains why the self-governing island is bolstering its preparations for a potential war with China.

Taipei

Taiwan holds unprecedented military drills

With questions continuing around the so-called Epstein files, U.S. President Donald Trump has made several controversial social media posts. Some political scientists say the posts are likely a way to distract the public from talking about Trump’s past ties sex offender Jeffrey Epstein.

Trump posts fake AI video of Obama arrest amid Epstein furor

The next set of peace talks between Ukraine and Russia - the first meeting in seven weeks - is planned for Wednesday in Turkey, President Zelenskyy quoted the head of Ukraine's National Security and Defence Council as saying.

Zelenskyy says new peace talks planned for Wednesday

Israel’s latest offensive in Gaza is targeting humanitarian hub Deir al-Balah because officials believe Hamas is hiding hostages there. The move comes as 25 countries, including Canada, called for an immediate ceasefire and the resumption of aid.

Israeli offensive targets humanitarian hub of Deir al-Balah

A sweeping cyber espionage operation targeting Microsoft server software 'SharePoint' compromised about 100 different organizations as of the weekend, two of the organizations that helped uncover the campaign said on Monday (July 21).

Redmond

Microsoft server hack hit about 100 organizations, experts say

Protestors showed up at the federal courthouse in Boston on Monday amid Harvard's $2 billion legal battle with the Trump administration.

Boston

Protestors gather outside courthouse amid Harvard-Trump hearing

Malcolm-Jamal Warner, an actor and artist who rose to fame as a child as Theodore Huxtable on “The Cosby Show,” has died in a drowning accident in Costa Rica, where he was on vacation with his family, according to a source close to the actor.

‘The Cosby Show’ star Malcolm-Jamal Warner dead at 54

An off-duty U.S. Customs and Border Protection agent was shot after an apparent robbery went wrong in New York, officials say. New York Mayor Eric Adams said a 21-year-old undocumented immigrant was taken into custody. The agent is in stable condition and is expected to survive.

Off-duty Border Patrol agent shot in NYC by undocumented migrant

The jet crashed onto the campus of Milestone School and College in Dhaka's Uttara neighbourhood, where students were taking tests and attending regular classes.

At least 20 killed after Bangladesh Air Force jet crashes into school

An investigation into Jeju Air's fatal plane crash in December has found "clear evidence" that pilots shut off the less-damaged engine after a bird strike in South Korea, a source told Reuters. But a progress report was not released as planned, after families of the bereaved protested some of its phrasing.

Breakdown