A topic that was previously only of interest to policy experts has now become a media focal point. The U.S. administration recently publicly criticized Fed Chairman Jerome Powell for overspending on the renovation of headquarters. Reports suggest that President Trump once intended to fire Powell but later backed down. Meanwhile, some members of the Fed's Board of Governors are urging Powell to lower interest rates sooner.
Firing Powell before his term ends in 2026 would break a long-standing practice, threatening the Fed's independence. Investors fear this would turn the Fed into a political tool, raising borrowing costs for businesses and consumers while undermining confidence in U.S. monetary policy.
Despite the instability, trading platforms like Polymarket have started offering odds on potential successors to Powell.
Who will replace Jerome Powell?
Source: Polymarket
As of Sunday, July 20, the most prominent names include:
Kevin Warsh – 24% chance
Former Fed governor from 2006 to 2011, who was overlooked by Trump in favor of Powell in 2017. Warsh currently strongly supports lowering interest rates and believes tariffs do not cause inflation. Recently, he stated, “We do not need to maintain the status quo when the central bank has lost credibility – the Fed needs a regime change.” However, some economists, like Neil Dutta, view Warsh as the worst option.
Scott Bessent – 20% chance
Trump's chief economic advisor, regarded as loyal and once considered for the Fed's top position by the president. However, Trump recently stated that he wants Bessent to continue in his current role. While expected to help stabilize the market, Bessent has not hesitated to side with Trump during stock sell-offs. Economist Paul Krugman warns that individuals like Bessent may lack independence if appointed.
Kevin Hassett – 12% chance
Director of the National Economic Council and a strong critic of the Fed's renovation budget. Hassett proposed cutting interest rates by up to 3 percentage points and was described as “fantastic” by Trump. However, his chances of Senate approval remain uncertain.
Christopher Waller – 12% chance
The current governor of the Fed is a little-known candidate but has an independent and academic stance. After warning that private sector job growth is slowing, he called for the Fed to cut interest rates in the upcoming meeting. Waller is regarded as a “steady, rational, and convincing” choice, in contrast to the politically colored candidates.