The early leader
Until recently, Kevin Hassett was widely seen as the most likely candidate to succeed Jerome Powell as chair of the Federal Reserve. A trained economist, Hassett has had a career spanning academia, think tanks, and senior policy roles. He worked at the Federal Reserve Board in the 1990s, taught at Columbia University and New York University, and later joined the American Enterprise Institute. Under President Trump, he chaired the Council of Economic Advisers during the first term and currently heads the National Economic Council. He combines familiarity with economic policymaking with personal access to the president.
In recent weeks, however, Trump has publicly suggested that he would prefer to keep Hassett in his current White House role. Hassett is closely aligned with the president, and his appointment could be interpreted as increasing political influence over monetary policy. Markets might respond by pushing up long term bond yields and mortgage rates, which would run counter to the administration’s preference for lower borrowing costs. Preserving market confidence therefore remains relevant.
A second consideration is institutional. Monetary policy is set by the Federal Open Market Committee (FOMC), not by the chair acting alone. From that perspective, the effectiveness of a chair depends on their credibility with other FOMC members and with Federal Reserve staff. A chair perceived as closely tied to the White House could find it harder to build consensus, limiting their influence over policy.
Outsiders vs. insiders
Attention has shifted to Rick Rieder. Rieder is BlackRock’s chief investment officer for global fixed income, overseeing more than $2 trillion in assets, and brings extensive experience in bond markets, including a long career at Lehman Brothers before joining BlackRock. He is not an economist by training and has never worked at the Federal Reserve.
While Jerome Powell is also not an economist by training, he became chair only after serving as a member of the Federal Reserve Board of Governors from 2012 to 2018. During that period, he developed a strong interest in economic analysis and established credibility with Fed staff. Rieder would be the first Fed chair without either formal economics training or prior Federal Reserve experience. At the same time, the chair must direct the Fed’s research function and command the confidence of Fed economists and other FOMC members, and it is uncertain whether Rieder has, or could readily acquire, that standing. Investors nevertheless tend to view him as pragmatic and market focused, and potentially able to argue for lower rates without unsettling markets.
The closest historical parallel is G. William Miller, who served as Fed chair from 1978 to 1979. Miller, a lawyer and former corporate executive, also lacked an economics background and prior central banking experience. His tenure was criticised for weak leadership during a period of rising inflation, and he was replaced after little more than a year. The episode highlights the risks associated with appointing an outsider, although Trump has often shown a preference for unconventional appointments and a willingness to depart from precedent.
Other contenders
Alongside Rieder, two more traditional candidates remain in the frame: Kevin Warsh and Christopher Waller. Warsh served as a Federal Reserve governor from 2006 to 2011 and is now a fellow at the Hoover Institution. He is a lawyer by training, with a background in finance and policy rather than academic macroeconomics. Warsh has been a critic of the Fed’s balance sheet expansion and policy framework, calling for what he describes as regime change. While once viewed as hawkish, he now supports lower rates alongside faster balance sheet reduction. His prior experience as a Fed governor gives him institutional credibility.
Waller, a current Fed governor appointed by Trump in 2020, represents the insider option. A macroeconomist by training, he previously served as research director and executive vice president at the St. Louis Fed after a long academic career. His policy views have evolved with the cycle: dovish before the pandemic, an early supporter of aggressive tightening in 2022, and more recently supportive of rate cuts as inflation has fallen. His qualifications are well established, though his limited political proximity to the president may weigh against him. The current probabilities for the next Fed chair are illustrated below.