A look at who could replace Powell as Fed chair

There is now a short list of people who could succeed Jerome Powell as the next Federal Reserve chair, each with their own pros and cons.

They include former Fed governor Kevin Warsh, National Economic Council Director Kevin Hassett, Treasury Secretary Scott Bessent, former World Bank president David Malpass, and current Fed governor Christopher Waller.

President Trump is expected to make his decision soon, two people close to the administration told Yahoo Finance, as he grows more impatient with Powell's wait-and-see stance on interest rates.

Powell's term as chair is not up until May 2026. Trump wants to announce a pick early as a shot across the bow at Powell, according to longtime Trump adviser Stephen Moore.

Here’s a closer look at the potential contenders:

There was a period earlier in 2025 when Warsh was viewed as the favorite to take over Powell's job.

He already has a lot of experience navigating inside the central bank. He served as Fed governor from 2006 until 2011 and became former Fed Chair Ben Bernanke’s liaison to Wall Street during the chaos of the 2008 financial crisis.

He is also a known figure to Trump, who interviewed him for the Fed chair post eight years ago before deciding on Powell.

Trump spoke to Warsh in February and March about replacing Powell, according to the Wall Street Journal, but Warsh advised the president against any such action until Powell’s term is up in May 2026.

He has been critical of the Fed as of late. He gave an April 25 speech in Washington, D.C., in which he said that its “current wounds are largely self-inflicted” and called for a “strategic reset” to ease a loss of credibility and damage to the Fed's standing.

In an earlier op-ed in the Wall Street Journal this January, Warsh predicted the Fed would try to blame high inflation on Trump and said he believed that any inflationary effect of tariff policies would likely be of smaller magnitude than the disinflationary influence of deregulation and spending cuts.

“In my time as a governor at the Fed, we would look through one-off price changes,” he said, a view of how the central bank should act on tariffs that has been echoed by the White House.

But past statements from Warsh also suggest he could be hawkish on the issue of inflation, which could become a concern for the White House as it pushes for lower rates. One person close to the administration said that the president is souring on Warsh.

Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments

The pro argument for Waller is that he is already on the Fed board as a governor, and he was the first central bank policymaker to call for lower rates in July following the Fed's last meeting on June 18-19.

Waller has said he believes any tariff-induced inflation will not be persistent and that inflation expectations are anchored. As a result, he supports looking through any tariff effects on near-term inflation when setting rates.

This aligns with the White House's view that any price increases will be transitory.

Trump also appointed him to the Fed board five years ago.

But Moore, a longtime adviser to the president, told Yahoo Finance that Waller's candidacy is harmed by the fact that he voted to keep rates on hold at the last central bank meeting.

Treasury Secretary Scott Bessent told House lawmakers earlier this month he would like to remain in his seat as Treasury secretary but has not dismissed the possibility of becoming the next chair of the Federal Reserve.

Bessent said he has “the best job” in Washington and is “happy to do what President Trump wants me to do,” while noting that he “would like to stay in my seat through 2029” to help carry out the administration’s agenda.

Before Trump was elected, Bessent in 2024 also floated the idea of naming a “shadow chair” well before Powell's term was up, ensuring that “no one is really going to care what Jerome Powell has to say anymore.”

Since being named Treasury secretary, Bessent has largely stayed out of voicing opinions on monetary policy, saying that the administration is looking to bring down longer-term bond yields through pro-growth policies of tax cuts, deregulation, and trade negotiations.

He has refuted the notion that tariffs will lead to any persistent inflation, but has acknowledged there could be a one-time increase in prices.

Bessent has a longstanding reputation as a respected Wall Street figure after decades in the investment management business.

He last served as CEO and chief investment officer of Key Square Capital Management, a global hedge fund focused on macro investing that he founded in 2015. Before that, Bessent was the chief investment officer of Soros Fund Management.

What will help the candidacy of David Malpass is that he has been calling for the Fed to lower rates for months now as a way of boosting growth.

“The Fed is really important to growth, and Trump is right that we've got to have lower interest rates and lower bond yields to get there,” Malpass told Fox Business Network back in March, noting that the Fed’s forecast for the economy was low.

He made another argument for lower rates just this month, in a June 13 opinion piece in the Wall Street Journal.

“Many signs indicate that rates should be lower, but the Fed has chosen to keep the interest rate steady because of its limits-to-growth economic models,” he wrote.

Read more: What experts say about the possibility of additional rate cuts

“A clear path is available to the Fed to lower interest rates as Mr. Trump’s policies add critical manufacturing and energy capacity and give priority to a stable dollar as the world’s reserve currency.”

Trump named Malpass as the president of the World Bank during his first term and he served in that role from 2019 to 2023. He was also US Treasury Undersecretary for International Affairs in 2017-2019 under Trump’s first administration.

Malpass also spent 24 years on Wall Street as an economist and held senior economic roles under Presidents Ronald Reagan and George H. W. Bush.

National Economic Council Director Kevin Hassett already has a close relationship with Trump, given that he advises the president on economic policy and also served in the first Trump administration.

Earlier in the year he said he was more focused on 10-year Treasury yields (^TNX) than on any quick monetary policy changes at the Federal Reserve.

But more recently, he has gotten more explicit about the need for the Fed to act. He told CNBC on Monday that “there is no reason at all for the Fed not to cut rates right now.”

With one more month of mild inflation readings, he added, “they will have to concede they have the rate way too high.”

Hassett noted that inflation is the lowest in four years by any measure right now and that he thinks growth is in a sweet spot.

In April he did tell reporters that Trump and his team were continuing to study if they could fire Powell, a move that Powell has said is not legal. Trump has since backed off threats to fire Powell, although he mused about doing so again last week.

But the Wall Street Journal reported this week that Hassett has told people he isn’t interested in Powell's job.

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