Who will be the next chairman of the Federal Reserve?

Federal Reserve Chairman Powell's term will end in May 2026. However, Bank of America believes that the U.S. government will nominate a candidate for Federal Reserve Chairman when the term of the director of the Board of Governors ends in January. This will allow the government to avoid the risk of Powell choosing to stay until 2028. Therefore, people may know who the next Federal Reserve Chairman will be in the fall of this year. Below are Bank of America's top candidates for Federal Reserve Chairman and their policy implications - Wash: "Consensus" Candidate Many clients seem to think that former Federal Reserve Board member Kevin Wash is the obvious front-runner for the next Federal Reserve Chairman. This is consistent with post-election news reports. However, Bank of America finds the consensus around Wash puzzling. He has always taken a hard line on Federal Reserve policy, including after the financial crisis, and his concerns have proven unfounded. Recently, he believes that the Fed cannot escape responsibility for inflation caused by tariffs. This seems contradictory to the government's call for rate cuts. Hassett: Rising Star Kevin Hassett is the head of the National Economic Council. He also served as the chairman of the Council of Economic Advisers from 2017-2019. Bank of America believes that Hassett has a good chance of being nominated. On the one hand, given his rich conservative economist background, Hassett is likely to have widespread support from Republican congressmen. On the other hand, Hassett may guide monetary policy in a moderate dovish direction, in line with the government's target for rate cuts. Wall: Long-term Candidate Fed Governor Wall was nominated to the board by President Trump in 2020. He recently made a dovish turn, claiming that tariff-driven inflation might be temporary. To Bank of America, Wall is a "long-term candidate." If he is wrong, he will not suffer much as most members of the Federal Open Market Committee do not agree with his views. But if he is right, his reputation will rise significantly. Similar to Hassett, we believe that if Wall becomes the Fed Chairman, he will push to bring rates down to neutral levels (around 3%) in the short term. Bessette: Tough Trade-offs Last week, there were reports that Treasury Secretary Bessette is vying for the position of Federal Reserve Chairman. The White House subsequently refuted this report. For Bessette, the move to the Fed would be a trade-off. As Fed Chairman, he would have a more stable position with a longer term (until 2030). However, if he leaves the Treasury, he will not be as actively involved in government policy decision-making. Bank of America believes that Bessette has a better chance of achieving the goal of lowering long-term yields at the Treasury than at the Fed. Numerous Dark Horses There may be other candidates emerging in the coming months. For example, Council of Economic Advisers Chairman Stephen Miller and former St. Louis Fed President Jim Brouil. It is also possible that President Trump may turn to well-known Wall Street figures (similar to Bessette), who are not currently on investors' radar.