- ANALYSIS: With Jerome Powell’s term as Federal Reserve chairman nearing its end, President Trump and analysts are speculating on potential successors, focusing on candidates like Chris Waller, Michelle Bowman, and Kevin Warsh—many of whom have to some extent advocated for interest rate cuts, aligning with Trump’s preferences. Observers add that while this push for a cut may be political positioning, the FOMC already appears to be shifting toward a more dovish stance on the base rate.
Jerome Powell may have a little under a year left as the chairman of the Federal Reserve, but analysts—and President Donald Trump—have already narrowed their gaze on a handful of candidates to replace him.
Trump has said he has three or four names in mind, while economists have suggested that an internal debate among the Federal Open Market Committee (FOMC) may suggest who is “auditioning” for Powell’s role.
Overnight sources told the Wall Street Journal that Trump may name the next Fed chairman—or woman—early in a bid to undermine Powell, with whom he has publicly feuded over Powell’s refusal to cut the base rate.
Trump’s threats against Powell have included everything from firing him before his term is up—a move he retracted after markets reacted to it negatively—as well as calling him “dumb” and “hardheaded,” and giving him the nickname of “Too Late Powell.”
Replacement speculation
As Powell’s succession creeps up the political agenda, analysts have begun speculating about who Trump has in mind.
While markets will want to see a candidate who recognizes and will protect the autonomy of the central bank, it’s also not a stretch to assume that the president will most likely be considering candidates who have advocated for an interest rate cut, in line with his own thinking.
If that’s the case, Trump has a few names to chose from.
The first is Chris Waller, a member of the Board of Governors at the Fed who has served since 2020. A voting member of the FOMC, Waller in recent weeks has emerged as somewhat more dovish, saying a cut could come as early as next month.
“I think we’re in the position that we could do this as early as July,” Waller told CNBC’s Squawk Box on Friday. “That would be my view, whether the committee would go along with it or not.”
The move led Jeremy Siegel, emeritus professor of finance at the Wharton School of the University of Pennsylvania, to question Waller’s motives. Writing for WisdomTree, where he is a senior economist, Siegel questioned: “Chris Waller argued…for a potential July rate cut. Is he auditioning to be Powell’s replacement? I agree with Waller, we’re too far above the neutral rate with tariffs coming.”
Another FOMC member now advocating for a cut is Michelle Bowman, also a voting member from the Board of Governors.
In prepared remarks at a conference in Prague this week, Bowman said: “Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market.
“In the meantime, I will continue to carefully monitor economic conditions as the administration’s policies, the economy, and financial markets continue to evolve.”
Siegel isn’t alone in his line of questioning as to why two fairly hawkish FOMC members are now publicly advocating for a cut.
“It has crossed our minds, therefore, that both Fed officials are simply effectively angling for the job of Fed Chair once Jay Powell is gone, by putting themselves in the camp of rate cutters,” wrote Macquerie’s Thierry Wizman and Gareth Berry in a note this week seen by Fortune. “But their comments imply also that the July meeting is ‘in play’ for a rate cut.”
Powell’s press conference following the last meeting was also somewhat more dovish than previous ones, the duo believe, meaning a general shift toward a cut does not make the public pushes from Waller and Bowman as surprising.
The analysts added: “To be sure, not everyone on the FOMC is likely to be on the same page yet, but even if there were no political motivations at work in FOMC decision-making and dissenting, the FOMC would still be drifting toward a rate cut, and would nearly certainly have cut in June had it not been for the uncertainty surrounding tariffs.”
The Fed declined to comment.
Further afield
Outside of the Board of Governors are some other notable names who have advocated—perhaps less strongly—for a cut.
This includes Chicago Fed President Austan Goolsbee, who said earlier this week that if inflation continues to stay on a fairly even path despite tariffs then rate cuts could continue. As he framed it: “If the dirt is out of the air, then I think we should proceed.”
That being said, when Goolsbee was previously asked about any designs on becoming Fed chairman, he stood firm behind Powell.
“I’m a huge fan of Chair Powell and I always say he’s the first ballot Hall of Famer in my book, and I have high standards,” Goolsbee told Fortune last year. “[Former Chair of the Fed] Paul Volcker was my dear friend. And Powell, nobody has better judgment than that guy.”
Another name in contention—and generally viewed as a front-runner—is Kevin Warsh, who served on the Board of Governors of the Federal Reserve System from 2006 to 2011.
Warsh has advocated for rate cuts previously, telling a panel at Stanford University’s Hoover Institution, back in May that “if the printing press could be quiet, we could have lower policy rates.”
He has also publicly offered frank commentary about how the Fed is being run and its decisions are being made. For example, speaking to a conference in Washington in April, the former special assistant for economic policy to President George W. Bush, said forward guidance used for decision-making has “little role to play” in normal economic conditions.
Warsh, who was formerly executive secretary of the White House National Economic Council, also warned against opining about the future of rates, adding: “Fed leaders would be well-served to skip opportunities to share their latest musings.”
