Who Will Replace Jerome Powell?

The race to replace Federal Reserve Chair Jerome Powell is heating up, with President Trump pushing for a new leader as Powell’s term nears its end in May 2026. Investors are buzzing, and betting platforms like Polymarket are tracking odds on potential successors. 

Here’s a look at the top contenders, their backgrounds, and what their leadership could mean for the Fed’s future.

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Why Is Powell’s Replacement a Big Deal?

President Trump has been vocal about his dissatisfaction with Powell, criticizing high interest rates and a $2.5 billion Fed building renovation. Some reports suggest Trump considered firing Powell but backed off due to legal and economic risks. 

Replacing Powell early could signal political influence over the Fed, shaking market confidence and raising loan rates for consumers and businesses.

The Fed’s Independence at Stake

The Federal Reserve operates independently to manage inflation and economic stability. An early replacement or a “shadow” Fed chair could undermine this autonomy, causing market confusion. 

Investors worry a politically aligned chair might prioritize Trump’s agenda, like aggressive rate cuts, over sound monetary policy.

Read Also: Will Trump Fire Jerome Powell? Inside the Fed Chair Showdown

Top Contenders for Fed Chair

Polymarket’s odds, as of July 20, 2025, highlight four key candidates vying to replace Powell. Each brings unique perspectives and ties to Trump’s administration.

Kevin Warsh: The Leading Candidate

Odds: 24%

Kevin Warsh, a former Fed governor (2006–2011), leads the pack. Once passed over for Powell in 2017, he’s now pushing for lower interest rates, claiming tariffs aren’t inflationary. Warsh has called for a “regime change” at the Fed, criticizing its credibility. 

However, economists like Neil Dutta of Renaissance Macro have slammed him as a poor choice, citing his hawkish past.

Scott Bessent: The Loyalist

Odds: 20%

Treasury Secretary Scott Bessent, a Trump ally, is a strong contender. Despite Trump’s preference for him to stay in his current role, Bessent hasn’t ruled out the Fed chair position.

He’s been praised for market savvy but criticized for loyalty to Trump, with Nobel laureate Paul Krugman questioning his independence. Bessent confirmed a formal selection process is underway.

Kevin Hassett: The Economic Insider

Odds: 12%

Kevin Hassett, National Economic Council director, is a longtime Trump advisor. He’s vocal about cutting rates by up to three points and has criticized the Fed’s renovation costs. 

However, his political ties could hinder Senate confirmation, as warned by Michael Brown of Pepperstone Group. Hassett insists Trump respects Fed independence despite policy disagreements.

Read Also: Does the US Government Hate Jerome Powell? Understanding the Drama

Christopher Waller: The Dark Horse

Odds: 12%

Current Fed governor Christopher Waller is gaining traction after advocating for a July rate cut, citing weak job growth. 

His academic approach makes him a less political pick, appealing to investors seeking stability. Waller argues inflation is near target, supporting immediate policy easing.

What’s Driving the Odds?

Polymarket’s odds shift with candidate statements and Trump’s signals. Warsh’s experience and recent dovish stance boost his chances, while Bessent’s loyalty and market know-how keep him in play. 

Hassett’s proximity to Trump helps, but his political baggage is a hurdle. Waller’s rising odds reflect his balanced, data-driven approach, though he remains a long shot.

Market and Expert Reactions

Investors fear an early nomination could create a “shadow chair,” undermining Powell’s authority and causing market volatility. 

Experts like Narayana Kocherlakota warn of policy confusion, while JPMorgan’s Jamie Dimon stresses the need for Fed independence. Posts on X show mixed sentiment, with some cheering Powell’s potential exit and others wary of political overreach.

Read Also: Is Jerome Powell Leaving? Looking at His Resignation Rumours

What’s Next for the Fed?

Trump’s push for a new chair signals a desire for a more dovish Fed, aligned with his economic goals like lower rates and trade policies. 

The selection process, already started, may wrap up by late 2025. However, a 32% chance remains that Powell won’t be replaced before his term ends, per Polymarket.

Challenges for the Next Chair

The new chair will face pressure to balance Trump’s demands with the Fed’s mandate to control inflation and support jobs. A politically driven pick could weaken the dollar and raise borrowing costs, while a steady hand like Waller might maintain market trust.

Conclusion

The race to replace Jerome Powell is more than a leadership change, it’s a test of the Fed’s independence. Kevin Warsh leads with 24% odds, followed by Scott Bessent, Kevin Hassett, and Christopher Waller. 

Each candidate’s approach could reshape monetary policy and market confidence. As Trump’s decision looms, investors and policymakers watch closely, knowing the stakes for the U.S. economy are high.

FAQ

Why is Jerome Powell likely to be replaced before May 2026?

Trump’s push for lower rates and frustration with Powell’s policies, including Fed renovations, makes early replacement a real possibility.

Who’s leading the race to become the next Fed Chair?

Kevin Warsh tops Polymarket odds at 24%, backed by dovish views and Trump ties, despite past criticism from economists.

Could a Trump-backed Fed chair hurt market stability?

Yes. A politically aligned pick risks creating a “shadow chair,” shaking market trust and the Fed’s independence.

What makes Christopher Waller stand out among candidates?

Waller's data-driven stance and support for rate cuts appeal to investors wanting a steady, less political Fed hand.

How soon will we know who replaces Powell?

A formal process is underway, with a decision expected by late 2025, but there’s still a 32% chance Powell finishes his term.

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