Who will succeed Powell?

Who will succeed Powell? What seemed like a foregone conclusion has become uncertain due to the latest remarks from JPMorgan Chase CEO Jimmy Dimon. White House economic advisor Kevin Hassett was initially considered the frontrunner, but Dimon's endorsement of another Kevin—former Federal Reserve Governor Kevin Warsh—has shifted the balance. According to Polymarket's forecast, Hassett's chances of winning have fallen from nearly 80% to around 50%, while Warsh's chances have risen from 10% to around 40%. Due to the increasingly fierce competition, what might have been a decision this year is likely to be delayed until early next year. However, this isn't necessarily a bad thing. Allowing candidates more time to prepare and giving the market more feedback could be a better stress test for US monetary policy at a crossroads. The most accurate prediction right now is that the next Federal Reserve Chairman will definitely be Kevin Hassett. Both Kevins are seen by Trump as "communicable" central bank leaders, but their paths and styles are drastically different: one is a "policy manipulator" deeply embedded in the White House political machine, adept at reshaping macroeconomic narratives through television debates and election rhetoric; the other is a technocrat from the central bank system, understanding how to keep pace with the market and how to balance independence with achievable political realities. At this juncture, with the shadow of inflation still looming and the path of interest rates still controversial, choosing either of them is a preliminary test of how the Fed will "handle politics" over the next five years. Hassett's trajectory is almost a microcosm of Trump's economic agenda. His experience at the National Economic Council and the President's Council of Economic Advisers has made him the loudest advocate for "interest rate cuts first"—publicly stating that "there is still ample room for interest rate cuts" and presenting cheaper auto loans and mortgages as a quantifiable political promise. This skill of translating monetary policy into consumer welfare resonates with voters' intuition and reinforces the White House's expectations for monetary easing. Meanwhile, his criticism of the Fed's independence and his public dissatisfaction with the current chairman have raised concerns in the market and academia: when the distance between the central bank and the administration is deliberately shortened, will the long-term credibility of price stability come at a cost? Warsh's narrative is more like an actor familiar with the central bank's "script" returning to the stage. His experience as a board member during Bernanke's era has given him a sensitivity to processes, communication, and market expectation management far exceeding that of typical political advisors; in his recent interactions with Trump, he also does not rule out lower interest rates, but emphasizes a "consultation, negotiation, and gradual" approach. This skill is particularly valuable in volatile cycles: it prevents rate cuts from becoming an extension of executive orders, while still preserving room for professional judgment. At the same time, Warsh's criticism of the Fed's policies may be more structural and subversive. He believes inflation is a choice, a result of excessively loose monetary policy and excessive fiscal spending. In other words, the various "uncertainties" currently emphasized by the Federal Reserve stem from its own internal issues. Many market participants who follow US monetary policy likely share this sentiment: Powell's repeated emphasis on various "uncertainties" while claiming his work is difficult yet correct feels somewhat like "passing the buck" and "cliché." However, Warsh argues that while monetary policy needs independence, it also needs to coordinate with fiscal policy. To some extent, excessively loose fiscal spending, coupled with a demand for equally loose monetary policy, only increases the difficulty of monetary policy and leaves it "unsure where to place." From this perspective, monetary policy needs to respond to or counteract fiscal policy while clearly defining its respective positions and objectives. If monetary policy cannot achieve its dual goals of "controlling inflation" and "full employment," then a large-scale adjustment to the monetary policy framework is necessary. From this perspective, Warsh's policy philosophy is more pragmatic, while Hassett's philosophy seems to be reduced to mere "practicality." However, if a large-scale adjustment to monetary policy is needed, Hassett, with no experience in monetary policy management, is unlikely to be the "right person," as he lacks practical experience beyond theoretical discussions. It's difficult to imagine a television commentator, besides being able to eloquently discuss monetary policy, making academic judgments and directional corrections to the various economic models used internally by the Federal Reserve. Ironically, despite leading the pack, Hassett may become a runner-up at the last minute due to his technical shortcomings. Jimmy Dimon's public support has effectively made Warsh the market's first choice, and Trump's final choice may lean more towards market preference over time. In other words, if Trump cannot finalize his selection in the short term, Warsh's technical and academic advantages may amplify over time. Specifically, Hassett may bring about rapid short-term rate cuts, but he cannot anchor long-term inflation, potentially leading to a steeper yield curve. Warsh, on the other hand, will find an equilibrium between overnight rates and long-term market rates. From another perspective, Warsh may be marginally more "hawkish" than Hassett, but he made the overall interest rate environment more balanced, and the yield curve smoother. In summary, the essential difference between the two Kevins lies in whether the next chairman can draw a clear and enforceable line between "short-term political gains" and "long-term institutional credibility." If the White House wants to turn the Fed into a growth accelerator, Hassett is clearly a more suitable choice; if the market values ​​controllable expectations and professional processes, Warsh's "central bank muscle memory" is more convincing. Choosing whom is not only a choice of interest rate path but also a choice of institutional culture. In this choice, the United States will redefine the distance between the central bank and the administration, and also redefine whether "independence" is a principle or a strategy.