Jerome Powell’s term as Fed Chair doesn’t expire until May 2026, so there’s no pressing need to decide upon a replacement. But it seems as if President Trump is becoming increasingly frustrated with the Fed’s wait-and-see approach to cutting interest rates, potentially prompting him to announce the new chair sooner. Indeed, according to the Wall Street Journal, White House insiders suggest the president might make the announcement in September or October, if not in the summer. President Trump himself has stated that he has a shortlist of “three or four” people for the position. 

It's important to note that the decision is unlikely to be based solely on whether the candidates are considered sufficiently “dovish”. We suspect that the administration will also want someone on board with its views of the economy and financial regulation.

Below we set out who we see as the likeliest replacements. 

Current position: Fellow at Stanford University’s Hoover Institution think tank

Past experience: Fed Governor (2006–11) and finalist for position of Fed Chair in 2017

Recent comment about monetary policy: “My recommendation is a smaller balance sheet. And interestingly, if you can have a smaller balance sheet, you can have lower interest rates.” (31 May).

Kevin Warsh is known to be close to President Trump through personal ties. According to another Wall Street Journal article from earlier this year, he has been given the impression that he has been told the job is all but his, once Jerome Powell’s term expires. 

Unlike some of the other candidates, it’s also very clear what he thinks about Fed policy as he has been an outspoken critic of the central bank since leaving in 2011. He is considered a hawk, which might affect his candidacy. Yet there is nuance here. Warsh could easily have a supply-side economics view where pro-growth tax policy doesn't necessarily lead to higher inflation, even when GDP growth exceeds potential. Thus, the Fed could be more dovish in its response.

Current position: Director of the National Economic Council

Past experience: Chairman of the Council of Economic Advisers

Recent comment about monetary policy: “I think there is no reason at all for the Fed not to cut rates right now.” (23 June)

Kevin Hassett is considered an insider with the president and in close alignment with his views on growth and inflation. He is also known for his loyalty to Donald Trump, having helped push through the 2017 tax cuts before returning as an advisor during the pandemic. 

Current position: Secretary of the Treasury

Past experience: Hedge fund manager

Recent comment about monetary policy: “Two-year rates are now below fed funds rates. That's a market signal that they think the Fed should be cutting.” (1 May)

Like Kevin Hassett, Scott Bessent is known to be close to the president and in lockstep with his views, including on tariffs. But also like Hassett, a move from Treasury Secretary to Fed Chair could raise eyebrows in Congress. He is likely to command considerable respect from the financial markets.

Current position: Fed Governor (since 2020)

Past experience: Executive Vice President at the Federal Reserve Bank of St. Louis

Recent comment about monetary policy: “We could do this (cut rates) as early as July. I think we’ve got room to bring it down, and then we can kind of see what happens with inflation.” (20 June)

Christopher Waller is seen as a dove with respect to monetary policy and is well respected by the markets. Having been appointed a Fed governor by Donald Trump in his first stint as president, he has an impressive resume and is viewed as a success in his current position and in his previous job at the St. Louis Fed. These roles also mean he offers the most continuity among the main candidates. He would probably also be the least controversial choice.

However, he does not know President Trump well, which could affect his chances. 

Current position: Economic analyst

Past experience: President of the World Bank Group

Recent comment about monetary policy: “Inflation slowed to 0.1% in May, providing another opportunity for the Federal Reserve to rethink its behind-the-curve interest rate policy.” (13 June)

David Malpass is certainly qualified as an economist, but we are somewhat skeptical that President Trump will end up selecting him. Like the other candidates, Mr. Malpass is quite supportive of the President’s tax and regulatory agenda, which is very important, but this alone may not be enough to move him to the top of the list.

Other names that have been mentioned as potential candidates include current Fed Governor Michelle Bowman.

We still expect the Powell-led Fed to hold off from cutting rates until the current chair departs next year given that we expect core inflation to remain above 2.5% this year and surpass 3% for most of 2026. After that, policy action could change depending on who is at the helm and the outlook for the economy.

In the meantime, an announcement on who will succeed Chair Powell could be delayed if the Fed does decide to cut rates (which is not our base case). At this point, it’s very unclear how the situation will unfold as a lot can happen between now and when Jerome Powell’s term ends on 15 May 2026.

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