🚀 The Battle for the Fed: Who Will Replace Powell?

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The Battle for the Fed: Who Will Replace Powell?

As Federal Reserve Chair Jerome Powell's term draws to a close in May 2026, the race for his successor has drawn intense political and financial interest. At the center of the fray are three primary candidates—Kevin Warsh, Kevin Hassett, and Christopher Waller—though the field has since expanded. Here's an in-depth look.

The Front-Runners

Kevin Warsh

A seasoned central banker, Warsh served as a Fed governor from 2006 to 2011, becoming the youngest person ever in that role. He was a key liaison during the 2008 financial crisis and held pivotal roles in the National Economic Council. Since leaving the Fed, he's been a Hoover Institution fellow and remains an influential voice in economic policy.

Kevin Hassett

Currently director of the National Economic Council under Trump’s administration, Hassett previously chaired the Council of Economic Advisers (2017–2019). A prolific thinker at AEI, he was also a key figure during Trump’s first term. His pandemic modeling drew significant criticism, and he’s a vocal supporter of the administration’s economic strategy, including tax reforms and tariff policies.

Christopher Waller

A current Fed governor since 2020, Waller brings deep institutional knowledge and research-driven, forward-looking monetary analysis. He’s viewed as pragmatic and “markets-aware” and enjoys credibility among both hawks and doves.

The Wider Field

Meanwhile, the selection pool has grown significantly, now including:

• Michelle Bowman, Vice Chair for Supervision, a dissenting voice who favors rate cuts and argues tariffs are a temporary inflation shock.

• James Bullard, former St. Louis Fed president, now a Purdue dean, with a blend of hawkish and cutting-rate instincts.

• Marc Sumerlin, a former NEC official under Bush, advocating for rate cuts amid soft labor data.

• David Zervos, Jefferies chief strategist—another finance-sector pick under review.

Treasury Secretary Scott Bessent is leading the interview process, aiming to present a refined shortlist to President Trump this fall.

Who’s Leading?

Christopher Waller currently holds the leads in prediction markets, with a 32% probability, followed by Hassett (18%) and Warsh (15%). Earlier polls had Hassett slightly ahead, but Waller’s perceived credibility and dovish tilt have boosted his odds.

Trump himself has praised “both Kevins,” but also seems aligned with Waller due to his dovish leanings, particularly as Trump seeks quicker rate cuts. Waller’s earlier warnings about job market softness, validated by recent data, only help his cause.

Implications of the Decision

The appointment could signal a significant shift in monetary policy and the Fed's structure. Trump-aligned voices are pushing not just for rate cuts but broader structural reforms—suggestions include downsizing regional Fed banks, trimming staff, re-evaluating the inflation mandate, and promoting a more politically responsive institution.

The signal sent by Powell’s successor—especially on policy independence and inflation credibility—will reverberate through markets and shape economic outcomes for years to come.

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Liam Gill