The search for a new Fed chair is nearing its end, with US President Donald Trump expected to announce Jerome Powell’s successor in the coming weeks.
Powell’s term as chairman of the Federal Reserve ends in May, but he is not required to leave the Washington-based Board of Governors until 2028, Reuters reported.
The high-stakes search also comes as the Fed chairman is at the center of a criminal investigation related to his congressional testimony in June about the cost of renovating a Federal Reserve building — an investigation that Powell has publicly denounced as politically motivated pressure on the Fed’s refusal to cut interest rates.
Who are the leading candidates for the next high chair?
Whoever Trump chooses, the nominee’s name would then go to the Senate for confirmation. Here are the top players being considered to replace Powell.
— Kevin Hassett, White House National Economic Director: Longtime conservative economist and key economic adviser to Trump. Hassett, 63, is a Trump loyalist who has consistently defended the president’s economic policies, played down data showing signs of weakness in the US economy and repeated accusations of bias in the Bureau of Labor Statistics.
— Kevin Warsh, former Fed official: He served as Fed Governor from 2006 to 2011. Warsh has been an outspoken critic of the Fed, attacking the central bank’s heavy reliance on asset usage data on its balance sheet, the BBC reported. Although he is known for his “hawkish” stance, favoring higher rates while in office, he is now seen as more in favor of lower rates in the near term.
— Christopher Waller, Fed Governor: He is the current Fed official whom Trump has nominated for the position in 2020. Waller also recently stressed that the Fed has room to cut interest rates even further, in line with Trump’s demands. But unlike Hassett and Warsh, he lacks the personal connections to top Trump’s list, according to the BBC.
— Rick Rieder, CEO of BlackRock: He has had a long career on Wall Street and also caught Trump’s attention with his ideas for overhauling the Fed, according to Bloomberg. Another aspect that gives Rieder an edge is that he has never worked at the Fed, unlike the other three finalists for the job. Because of this, people see him as not beholden to the institution.
Potential challenges for the next powered chair
Trump appointed Powell to head the central bank in November 2017, but regretted his decision when the Fed chief ignored his demands for sharper interest rate cuts. Powell has repeatedly emphasized that Fed officials make decisions based on what is best for the economy.
As tensions flare amid Powell’s investigation, the next Fed chairman is likely to face a challenging environment. The central bank is grappling with both political pressure and internal disagreements over how it should set interest rates in the coming months.
Trump has also made it clear that he wants lower borrowing costs, putting extreme pressure on the Fed’s independence, which is vital to stable monetary policy. Some economists and market participants worry that political interference in Fed decisions could blur the line between political goals and central bank policy.
