As 2026 approaches, the focus is on the decision that will have the greatest impact on US economic policy. Who will be the next Federal Reserve chairman after Jerome Powell ends his term in May?
Donald Trump said that he will announce the choice of Powell early in 2019. This brings to an end months of criticisms of Powell’s interest rate policies and his central bank’s unwillingness to change policy.
Trump’s anger at Powell is a theme that has recurred throughout his presidency. The president has repeatedly claimed lower interest rates are necessary to stimulate growth, the markets, and job creation.
As the transition nears, deeper questions are raised about the Fed’s credibility and independence at a moment when the inflation rate has dropped but labour markets show signs of stress.
The new Fed Chair will be on a razor’s-edge
White House made no secret about what they want in their successor.
Investors and economists are concerned by Trump’s statement that he wants a central bank chair more open to his ideas. They believe independence of the central banks is critical for economic stability.
Andy Laperriere of Piper Sandler’s US Policy Research, told The New York Times, that anyone who takes on the position risks “damaged products”.
Laperriere explained that you could either be the one who gets what the President wants and your history will be a bad thing, or you can be the person who fails to get it, in which case he would probably turn against you.
The markets have noticed. Analysts say that, if Trump’s goal is undermined by the perception of the Fed Chair as being beholden only to political pressure, the borrowing cost could increase rather than decrease.
The odds on the top four competitors
Trump said to the Wall Street Journal that last week he preferred Kevin Hassett as his White House Economic Advisor or Kevin Warsh, a former Fed Governor.
The prediction markets show a close race. Kalshi places Warsh’s odds around 47%, and Hassett’s at 40%. Polymarket also shows the same probabilities.
The odds of the current Fed Governor Chris Waller being a distant second are in single digits.
Rick Rieder (head of BlackRock’s fixed income) is another candidate and Trump will interview him in the final week of this year.
Some names are no longer relevant. Fed Governor Michelle Bowman has been ruled out of the running. Treasury Secretary Scott Bessent who was long thought to be Trump’s top choice for this role, declined repeatedly.
Kevin Hassett: loyalist under scrutiny
Kevin Hassett is a 63-year-old man with a PhD and he has served on the Fed’s staff since the early 1990s.
Later, he joined the American Enterprise Institute where he focused his work on supply-side and tax policies, before becoming an important member of Trump’s team.
Hassett has said that there are plenty of room to cut rates, and he cites strong productivity growth as well as what he believes is a higher GDP potential growth.
He said, “I believe there’s plenty of room for improvement… with productivity growth and capital stock increases, we’re talking about a potential GDP that is north of 3, maybe even north of 4.” This was at the Wall Street Journal’s CEO Council in December 2025.
Hassett, in recent weeks has been under increasing scrutiny for his relationship with the President.
He said in an interview on CBS News Sunday that he was interested to hear Trump’s opinions on interest rates but they wouldn’t influence his decisions.
In an interview with CNBC, he stated that “the Federal Reserve’s independent is very, very important. And the voices of other people [at the Federal Open Market Committee] are important too.”
The best way to influence interest rates is by establishing consensus on facts and data.
Detractors still question his performance as the head of National Economic Council. They claim that he played more of an advisory role rather than one of policy driving.
This has led to doubts as to whether he’s qualified for the role of central banker during an economic period that is sensitive.
Kevin Warsh, critic and contender
Kevin Warsh (55) appears to be gaining momentum.
Former Fed Governor with strong ties to Republican circles. He has advised billionaire Stanley Druckenmiller, and is affiliated Stanford University’s Hoover Institution.
Trump said Warsh was at the top his list but he did not make a decision.
When asked by The Wall Street Journal if Warsh is at the top, Trump replied “Yes I believe he’s there.”
Warsh is a critic of the Fed who has been vocal in recent years. He has called for reforms and warned that the Fed has overreached its role, especially through the balance sheet, and its engagement on issues like climate change and inclusivity.
In recent months, he has adopted a more dovish position and argued that the rates could be significantly lowered without re-igniting inflation.
Fox Business, October 24, 2025, reported that “we can lower rates and get fixed rate mortgages for 30 years…. With the technology revolution allowed by the President’s policies, and the massive investments in the domestic economy and foreign investment, this is seed corn for the productivity revolution.”
Warsh warned about inflation risk just last year.
Jamie Dimon, the chief executive of JPMorgan Chase, has been a strong supporter. However critics claim that his demands for a “regime-change” are lacking in detail.
Chris Waller, the technocrat alternative
Chris Waller is 66 years old and stands out from all the politics.
Waller, a longtime professor and former director of research at the St. Louis Fed joined the Fed Board of Governors as an appointee of Trump in 2020.
His views are based on data and theories, not ideology.
Waller is among those who have pushed for rate increases in 2022, to fight inflation. More recently, he has backed rate reductions as the evidence that labour markets are cooling up has increased.
If inflation eases, he said that rates may fall 50-100 basis points.
Waller, unlike Hassett or Warsh, hasn’t argued the Fed is fundamentally political, but he expressed concerns about mission creep.
While his technocratic approach might appeal to the markets, his lack of a political profile may count against him when he is asked by a White House for loyalty.
Rick Rieder, outsider and slim chance
Rick Rieder is BlackRock’s Chief Investment Officer for Global Fixed Income. He represents the alternative option.
He has experience in advising institutions such as the US Treasury, the Fed and other public ones.
Rieder, who shares Trump’s view on the matter, has consistently argued for rate reductions and a normalisation of the economy.
The prediction markets give him odds around 2%.
Although he is not as outspoken in his criticism of the Fed, as other candidates are, his admission that tariffs can increase inflation could complicate his campaign.
The consequences of a decision
Trump will choose a Fed that is at a critical juncture.
The inflation rate has slowed from the peaks it reached, but is still a cause for concern. Meanwhile, labour markets are weakening, and politics is becoming more scrutinized.
Credibility of US monetary policies may depend as much on perceptions as independence, as it does on rates.
Investors, policymakers, and the general public are all watching the situation closely as the Fed Chair election approaches. They know that this decision could have a lasting impact on the economy, long after current politics has ended.
The post, Who is next in line to be the Fed’s chief? The list of top contenders for the Fed’s top job may change as new information becomes available
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