Who will be the next Chair of the Federal Reserve?

According to the Zhitong Finance APP, the term of Federal Reserve Chairman Jerome Powell will end in May 2026. However, Bank of America believes that the U.S. government will nominate a candidate for Federal Reserve Chairman to the Federal Reserve Board when the term of the Council of Economic Advisers ends in January. This would allow the government to avoid the risk of Chairman Powell choosing to stay on until 2028. Therefore, people may know who the next Federal Reserve Chairman is as early as this fall.

Here are the popular candidates for Federal Reserve Chairman compiled by Bank of America, along with their policy impacts—

Warsh: The "Consensus" Candidate

Many clients seem to believe that former Federal Reserve Governor Kevin Warsh is the obvious frontrunner for the next Federal Reserve Chairman. This aligns with post-election news reports.

However, Bank of America finds the consensus around Warsh puzzling. He has consistently taken a hardline stance on Federal Reserve policy, including after the financial crisis, and his concerns have proven unfounded. Recently, he argued that the Federal Reserve cannot absolve itself of inflation responsibility caused by tariffs. This seems to contradict the government's calls for interest rate cuts.

Hassett: A Rising Star

Kevin Hassett is the Chairman of the Council of Economic Advisers. He also served as the Chairman of the Economic Advisory Board from 2017 to 2019.

Bank of America believes that Hassett has a good chance of being nominated. On one hand, given his extensive background as a conservative economist, Hassett should receive broad support from Republican lawmakers. On the other hand, Hassett may steer monetary policy in a moderately dovish direction, which aligns with the government's announced goal of interest rate cuts.

Waller: The Long-Term Candidate

Federal Reserve Governor Christopher Waller was nominated to the board by President Trump in 2020. He recently made a dovish turn, claiming that tariff-driven inflation may be temporary.

In Bank of America's view, Waller is a "long-term candidate." If he is wrong, he will hardly suffer any losses, as most members of the Federal Open Market Committee do not share this view. But if he is right, his reputation will rise significantly. Similar to Hassett, we believe that if Waller becomes Federal Reserve Chairman, he would advocate for bringing interest rates down to neutral levels (around 3%) in the short term.

Becerra: A Tough Trade-Off

Last week, reports emerged that Treasury Secretary Xavier Becerra is campaigning for the position of Federal Reserve Chairman. The White House subsequently refuted this report. For Becerra, transitioning to the Federal Reserve would be a trade-off. As Federal Reserve Chairman, he would have a more stable position with a longer term (until 2030). However, if he leaves the Treasury, he would not be as actively involved in government policy decisions.

In Bank of America's view, Becerra has a better chance of achieving the goal of lowering long-term yields at the Treasury than at the Federal Reserve.

Many Dark Horses

Other candidates may emerge in the coming months.

For example, Chairman of the Council of Economic Advisers Stephen Moore and former President of the St. Louis Federal Reserve Jim Bullard. There is also the possibility that President Trump may turn to well-known figures on Wall Street (similar to Becerra) who are currently not on investors' radar