The American academic community strongly supports "hot favorite" Waller to succeed as Chairman of the Federal Reserve, but hopes may be "in vain"
A survey by the University of Chicago shows that 82% of economists believe Waller is the best candidate for the next chair, but only one-fifth think he can secure the position. 39% of scholars predict that Hassett is more likely to be elected, although no one wants him to hold the position. There is a gap between academic preference and political reality—Waller's independent stance on monetary policy has earned professional recognition, but it may become an obstacle to receiving Trump's nomination
Despite strong support from the academic community for Waller to succeed as Chairman of the Federal Reserve, political realities may prevent him from obtaining the position—because he "looks like a central bank governor," but is not the type preferred by Trump.
On September 28, the Financial Times reported that according to a survey conducted by the Clark Global Markets Center at the University of Chicago Booth School of Business for the Financial Times, although 82% of scholars believe that Federal Reserve Governor Christopher Waller is the best candidate for the next chairman, only one-fifth believe he can actually secure the position in 2026.
The survey also showed that 39% of respondents believe that White House National Economic Council Chairman Kevin Hassett is more likely to become the next Federal Reserve Chairman, although no respondents expressed a desire for him to hold this position.
This prediction reflects the challenges to the independence of the Federal Reserve under Trump's administration. Waller's independent stance on monetary policy has earned him support from academia, but this very trait may become an obstacle to his nomination.
According to Jianwen article, Trump previously demanded that the Federal Reserve lower interest rates to 1% and publicly criticized current Chairman Powell as an "idiot" and "moron" for refusing to implement significant rate cuts, even threatening to fire Powell. U.S. Treasury Secretary Yellen is currently conducting the first round of interviews for chairman candidates, expected to be completed within two weeks. The new chairman will face the dual challenges of a weak labor market and inflation driven up by Trump's tariffs, with most scholars warning that the risk of stagflation is rising.
The Gap Between Academic Preference and Political Reality
Among the 44 economists surveyed at the University of Chicago, Waller emerged as the overwhelming academic favorite, but political winds clearly point elsewhere. Robert Barbera from Johns Hopkins University stated:
"Waller looks like a central bank governor, not someone who would grovel for the position of Federal Reserve Chairman. That is precisely why he won't get the job."
Predictions from the betting markets are more aligned with academic expectations, viewing Waller as the frontrunner, followed closely by Hassett.
Trump has previously hinted that former Federal Reserve Governor Kevin Warsh, Hassett, and Waller are his top choices, viewing loyalty and a willingness for aggressive rate cuts as key requirements.
Notably, no surveyed scholars expressed a desire for Stephen Miran to become the next chairman, although one-fifth believe he is the most likely candidate.
Miran is Trump's latest nominee for the Federal Reserve Board and the only dissenter in this month's rate cut decision; he supports a 50 basis point cut and has called for five more cuts by the end of the year.
It is worth noting that although Waller supported a 25 basis point cut in the July vote, he did not support Miran's call for a larger cut in September, indicating his relatively cautious stance.
Economic Challenges and Policy Disagreements Facing the New Chairman
Reports indicate that the new chairman will face the challenge of formulating monetary policy in an environment of a weak U.S. labor market and inflation driven up by Trump’s tariffs. The Federal Reserve made its first interest rate cut since December of last year this month, lowering the target range for the federal funds rate by 25 basis points to 4-4.25%.
Most Federal Reserve officials believe that Trump’s tariffs will lead to a one-time increase in the prices of a few U.S. goods, and they are more concerned about the slowdown in job growth than inflation risks. However, scholars surveyed believe that the prospect of stagflation is increasing—where unemployment and inflation rise simultaneously.
Nikolai Roussanov from the Wharton School stated:
"The dual mandate puts the Federal Reserve in a bind, but if recent history is any guide—at least over the past few decades—the Federal Open Market Committee tends to prioritize employment over inflation."
Brad DeLong from the University of California, Berkeley warned that economic growth will slow due to tariffs causing global supply chains to bypass the U.S. He stated, "Serious problems are likely to arise in the economy."
