Who Will Possibly Be The Next US Federal Reserve Chair?

Speculations are coming from across the USA, about who will be the next Federal Reserve Chair.

US Federal Reserve

US Federal Reserve's present Chairman, Jerome Powell is about to step at the end of his current term at the Fed office, and the country's analysts are speculating who is possibly going to become the next Fed Chair. The 2 most prominent names are being discussed lately, Jerome Powell himself, and Lael Brainard.

Who is Lael Brainard?

Lael Brainard's name has been in discussion lately because of her strong challenge for the Fed Chair position. Brainard is serving the Federal Reserve Board of Governors since 2014, while before that she has served as the Undersecretary of the US Department of Treasury from 2010 to 2013. Prior to that, she was the Counselor to the secretary of the Treasury in 2009 when Barack Obama was the President.

Speculations by analysts

President Joe Biden will make the final announcement on who will lead the Federal Reserve in the next term, for 4 more years. Commenting on the decision, Senate Banking Committee Chairman Sherrod Brown told Bloomberg, "I hear it's imminent. I assume the decision's been made and they haven't announced it."

In a recent note, BTIG analyst Isaac Boltansky stated, "We still believe the odds slightly favor Federal Reserve Chairman Powell being re-nominated for another term, although we fully admit that Gov. Brainard's prospects appear to have improved both among our contacts and in prediction markets."

On the other hand, in a recent report, Barron's mentioned, "Political betting site PredictIt has said Brainard's chances of nomination at 33% and Powell at 67%. A month ago, prediction markets forecast a 22% chance for a Brainard nomination and 72% chance for Powell to be renominated."

Possible monetary policy changes

Jerome Powell has already received comments that he is a dovish Fed Chair, because of his monetary policy and also because he is not ready to hike the interest rate soon. But analysts are saying that Lael Brainard might be even a more dovish Fed Chair than Powell.

Ed Mills, Washington policy strategist at Raymond James earlier commented to CNBC, "I think the market views Brainard as slightly more dovish. I think the honest answer is there probably is not a significant difference between either candidate. The biggest asset that Powell has is the trust and the confidence of the market, and a kind of a track record of doing exactly what he thinks is right despite the considerable amount of political pressure."

Interest rate and inflation

Hence, a more dovish Fed Chair will lead to a more delayed interest rate hike by the central bank. So, a high inflation rate will emerge as a bigger concern then. At present, investors and analysts are expecting an interest rate hike in the mid-2022, after the tapering program. The gold market in that case will get more room to thrive, and gold rates will be able to cross the $1900 level.

(Also read: Why Is the Inflation Rate Rising In The USA?)