The race to replace Fed Chair Jerome Powell is drawing significant attention from investors and the media, as the Trump administration pressures him.
The risk of firing Powell before the end of the 2026 term raises concerns about the politicization of the Fed, negatively affecting trust and the U.S. financial markets.
MAIN CONTENT
Mr. Trump criticizes Powell for the renovation spending at the Fed headquarters and considers replacement before the term ends.
Many candidates are assessed based on their policies and relationships with the president.
Replacing Powell could harm the Fed's independence and cause market volatility.
What pressures are being directed at Fed Chair Jerome Powell?
Mr. Trump strongly criticizes Powell for spending on the renovation of the Fed headquarters and proposes earlier interest rate cuts. Some Fed officials are also urging for looser policy, putting significant pressure on Powell before his term ends in 2026.
The Fed Vice Chair has emphasized that political interference in the Central Bank would undermine the credibility of U.S. financial markets.
Who are the promising candidates to replace Powell?
Prediction platforms like Polymarket have identified top candidates based on policy and loyalty to the President. Kevin Warsh leads with a 24% chance, followed by Scott Bessent, Trump's close financial advisor, with 20%.
Figures like Kevin Hassett and Christopher Waller are also of interest as they both support interest rate cuts, attracting attention from the market and experts.
The need for a "complete regime change" at the Fed is necessary as the Central Bank has lost credibility in the eyes of the public.
Kevin Warsh, former Fed manager, July 2025, Fox Business
Kevin Warsh – Strong desire for change
Kevin Warsh served as a Fed manager from 2006 to 2011, praised for his timely interest rate cut views and analysis that tariffs do not create significant inflation pressure. However, many prominent economists like Neil Dutta have opposed this choice due to concerns about political influence over the Fed.
Scott Bessent – Loyalty to the President
Scott Bessent, Trump's chief financial advisor, has a 20% chance. He is seen as loyal, however, experts like Paul Krugman are skeptical about the independence in policy decisions if Bessent is chosen.
Kevin Hassett – Critic of costs and supporter of cuts
Kevin Hassett, Director of the National Economic Council, has been warned by observers that he may struggle to get Senate approval, despite his sharp views on interest rate cuts and having publicly criticized the Fed's renovation budget.
Christopher Waller – Notable academic candidate
Christopher Waller, a current member of the Fed, proposes interest rate cuts due to slow job growth. His politically untainted view makes him highly regarded among the remaining candidates.
"The current economic environment should not wait for the labor market to weaken before taking action. The Fed needs to cut interest rates quickly to maintain stability."
Christopher Waller, Fed manager, speaks July 2025
How will replacing Powell affect the financial markets?
Firing the Fed Chair early could break a long-standing rule, causing the Fed to be perceived as a tool of politics. This risks pushing borrowing costs up, reducing trust in U.S. monetary policy, and increasing market volatility.
Currently, exchanges are closely monitoring candidate odds to predict future moves, while investors fear that the Fed's credibility will be harmed if political interference occurs.
Frequently Asked Questions
Can Mr. Trump fire the Fed Chair before 2026?
The law does not prohibit this, but it breaks tradition and could destabilize the financial markets.
Who is being considered the top candidate to replace Powell?
Kevin Warsh leads with a 24% chance according to Polymarket's forecast, followed by Scott Bessent and Kevin Hassett.
How will changing the Fed Chair affect interest rates?
Could lead to faster interest rate cuts, or cause instability due to sudden policy changes.
Is the politicization of the Fed dangerous?
Very dangerous, could undermine trust in the Fed and negatively affect the national economy.
When will the decision to replace the Fed Chair be announced?
There is currently no exact timeline; the announcement could be delayed until the end of 2025.
Source: https://tintucbitcoin.com/who-will-replace-powell-the-market-chooses-the-top-candidate/
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