The race to replace Jerome Powell as the most powerful economic official on the planet has narrowed to a high-stakes contest of loyalty versus continuity. As Powell’s term expires in May 2026, U.S. President Donald Trump is zeroing in on a shortlist of contenders to lead the Federal Reserve, with former Governor Kevin Warsh and current Governor Christopher Waller emerging as the clear frontrunners.

The search is unfolding against a backdrop of extraordinary tension. The Department of Justice has launched a probe into Powell regarding renovation costs, a move critics see as a pressure tactic to force his early exit. Meanwhile, Trump has made it clear he demands a Fed Chair who is not only competent but aligned with his vision of aggressive interest rate cuts to juice the American economy.

The Contenders

Kevin Warsh: The betting markets’ favorite. A former Fed Governor and Wall Street veteran, Warsh is seen as the "change candidate" who understands the markets and has the Presidents ear. He has been a vocal critic of the Fed’s recent policies, aligning him with Trump’s desire for a shake-up. His odds on prediction platforms like Kalshi have surged to 60%.

Christopher Waller: The "insider" choice. As a current Governor, Waller has the technical chops and institutional knowledge to steer the ship without causing a market panic. He has recently advocated for rate cuts, a stance that puts him in the Presidents good graces without the baggage of being an "outsider."

Kevin Hassett: The loyalist.)Currently the Director of the National Economic Council, Hassett was an early favorite. However, Trump recently signaled a desire to keep him in the White House, telling him, "I actually want to keep you where you are." This likely removes him from the running, clearing the lane for Warsh or Waller.

• The "Shadow Candidate": Rick Rieder, BlackRock’s Chief Investment Officer, is also in the mix. His selection would signal a truce with Wall Street, though his lack of government experience is a hurdle.
• The Policy Pivot: Whoever takes the chair faces a daunting task: navigating a potential trade war, managing the fallout of the US deficit, and delivering the "cheap money" era Trump has promised voters.
• Global Impact: For emerging markets like Kenya, the choice is critical. A dovish Fed Chair who cuts rates weakens the dollar, potentially easing pressure on the Kenya Shilling and making debt repayment cheaper. A hawk would do the opposite.

The Powell Factor

Jerome Powell’s exit is poised to be acrimonious. The DOJ investigation into the $2.5 billion renovation of the Fed’s headquarters has cast a shadow over his final months. Trump has denied plans to fire him explicitly but has created an environment so hostile that a smooth transition seems impossible. "They are going to look at the data," Powell said stoically regarding the transition, but the political winds are blowing gale-force against him.

The decision, expected within weeks, will define the global economic trajectory for the next four years. Trump wants a loyalist; the markets want stability. In Kevin Warsh, he may believe he has found someone who can offer both—or at least, someone who will pick up the phone when the White House calls.