The December meeting of the Federal Reserve’s FOMC took place last week. The Committee decided to cut the Fed funds rate by 25bps, to 3.50-3.75%, but three dissenters emerged. On the dovish side, Steve Miran renewed his vote for a 50bps cut. On the hawkish side, Austan Goolsbee and Jeffrey Schmid, two FOMC members who are more concerned about inflation than the labour market, opted for no change.

This is just an appetiser to what the battle to succeed Jerome Powell will look like. As Powell’s term as Chairman of the US Federal Reserve nears its conclusion, speculation is rife regarding who may be chosen to lead the world’s most influential central bank. Among the notable contenders are Kevin Hassett, Kevin Warsh, Christopher Waller, and Michelle Bowman. Each brings a distinct background and set of policy preferences to the table, shaping the debate over the Fed’s future direction:

Kevin Hassett, former Chairman of the Council of Economic Advisers and currently Director of the National Economic Council. He is known for his market-friendly views and support for fiscal stimulus measures. His academic background and experience in government make him a credible candidate, though market participants are scared of his closeness to President Trump. They fear that he will simply do what the President asks of him, including cutting rates aggressively even if inflation is not back to target levels, and stops declining.

Kevin Warsh, a former Fed governor, is often cited for his hawkish views on inflation and his close ties to Wall Street. Warsh’s experience during the 2008 financial crisis, combined with his reputation for advocating tighter monetary policy, could appeal to those seeking a more conservative approach to inflation and asset bubbles, but this could make it harder to be chosen by Trump, who wants a “rate cutter”.

Christopher Waller, an economist currently serving as a Fed governor, is seen as a continuity candidate. Waller has closely aligned with Powell’s policy stance, supporting gradual rate hikes and a data-driven approach. Clearly having Waller dissented with Powell over the last few months to favour an easier Fed stance, would be more palatable for Trump.

Michelle Bowman, also a current Fed governor and a former attorney, brings a unique perspective as an advocate for community banks and rural economies. After seven years as a board member, President Trump nominated Bowman to succeed Michael Barr as Vice Chair for Supervision, a position she was confirmed for in early June 2025. In that position, she launched a substantial deregulatory push of the US banking sector and probably this would make her the favourite choice by the “tech-bros” pushing the pro-crypto agenda.

There remains the possibility of an outsider emerging—a candidate from academia, the financial sector, or even a state-level regulator. Such a choice could shake up the Fed’s culture and policy direction, introducing fresh perspectives but also raising concerns about experience and continuity. One cannot rule out that Trump will appoint Steve Miran as the new Fed Chair, but the risk of a severely negative market reaction to such a choice may discourage him from doing so.

Ultimately, the battle to succeed Jerome Powell is not just about personalities, but rather reflects deeper questions about the Federal Reserve’s role and independence, which is likely to be severely diminished during the remainder of Trump’s second term