ALL BETS ARE OFF

For the next Fed chair, Trump seems keen on anybody but Yellen

Not long ago, it seemed Janet Yellen, the current chair of the US Federal Reserve, would be reappointed to run the world’s most powerful central bank when her term expires in February. But the tides have turned recently.

In a dizzying week for monetary policy wonks, Trump held four meetings with candidates and aides about the next Fed chair and moved up his expected announcement on a final decision. On Friday (Sept. 29), during an impromptu question-and-answer session, Trump said that instead of waiting until the end of the year, he’ll select the next Fed chair within the next two to three weeks.

Trump and treasury secretary Steve Mnuchin met with Kevin Warsh and Jerome Powell last week, to discuss their credentials to take over from Yellen.

Kevin Warsh served on the Fed’s powerful Board of Governors during the financial crisis, and is now a fellow at Stanford’s Hoover Institute. While his background, as both an ex-financier and academic fellow, makes him a typical choice for Fed chair, his views also seem to align closely with Trump’s. Warsh has emphasized that the Fed is not as independent as people think and should be accountable to Congress, the public, and the president. His odds of becoming Fed chair have risen rapidly since Trump’s economic advisor, Gary Cohn spoke out against his boss’s handling of protests in Charlottesville, reportedly dooming his once-strong candidacy for the top Fed post.

Powell, who currently serves on the Board of Governors, is a dark horse candidate. Few anticipated his ascendance—Powell wasn’t priced in PredictIt’s betting pool until late last week, after news of his interview with Trump broke. Still, he is seen as a more likely candidate than Yellen, according to recent trading. While Powell leans conservative, an ostensible prerequisite for a Trump nomination, he lacks the academic pedigree of previous Fed chairs. His background is heavy on roles in private equity and investment banking, broken up by a stint at the Treasury Department under George H.W. Bush.

Whoever is currently top of Trump’s thinking, one thing is clear: Yellen’s days at the Fed seem numbered.

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