Donald Trump considers '3 or 4' names to replace Federal Reserve Chair Jerome Powell

Powell told lawmakers the Fed must assess Trump’s tariffs' effects before more rate cuts and ensure temporary price hikes don’t lead to lasting inflation.

US President Donald Trump said Wednesday he had a handful of candidates potentially lined up to replace Federal Reserve Chair Jerome Powell, whom he sharply criticised for his handling of the world's top economy.

Hours before Powell's testimony on Tuesday, Trump wrote on his Truth Social platform that rates should be "at least two to three points lower." (AFP)

Unlike his precedessors, who avoided giving advice to the independent central bank, Trump has fired frequent broadsides at Powell, urging him to cut interest rates.

"I know within three or four people who I'm going to pick," Trump told reporters after a NATO summit.

"I mean he goes out pretty soon fortunately because I think he's terrible," said Trump of Powell, whose term ends in May next year.

Trump added that Powell was "average mentally" and had "low IQ for what he does."

On Tuesday, Powell said the world's top central bank needed to see the impact of Trump's tariffs before deciding on further rate cuts.

He told US lawmakers that the Fed needed to ensure that a one-time spike in prices did not become an "ongoing inflation problem."

But he said rates could be lowered sooner if inflation came in weaker than expected or if the labour market deteriorated.

The Fed has held its benchmark lending rate steady since its last reduction in December, bringing the level to a range between 4.25 percent and 4.50 percent.

Hours before Powell's testimony on Tuesday, Trump wrote on his Truth Social platform that rates should be "at least two to three points lower."

On Trump's criticism, Powell said: "We always do what we think is the right thing to do, and you know, we live with the consequences."