Fed Chair Race Tightens: CEOs Rally Behind Waller as Independence Concerns Dog Hassett

The race to succeed Jerome Powell as Federal Reserve Chair in 2026 has intensified, creating significant divergence in market sentiment. While the White House weighs political loyalty, Wall Street and corporate America have thrown their weight behind a candidate viewed as a bastion of central bank independence.

The ‘Dark Horse’ Favorite

According to recent polling, 81% support current Fed Governor Chris Waller for the top job. Despite lacking the deep White House connections of other candidates, Waller has emerged as the clear market favorite. At a recent Yale CEO summit, reactions to Waller were “overwhelmingly positive,” with equities rising and bond yields falling in real-time as he spoke—a testament to his credibility on both inflation control and labor market support.

Waller is perceived as the “Goldilocks” candidate: a lifelong Republican who can navigate political pressure without succumbing to it. His early calls on inflation in 2021 and his pivot to advocating for rate cuts in 2024 have bolstered his reputation for prescient, data-driven policy.

The Loyalty Test

In stark contrast, former Council of Economic Advisers Chair Kevin Hassett remains a top contender, primarily due to his perceived loyalty to Donald Trump's economic agenda. However, Hassetts shift from a traditional free-trader to a vocal defender of tariffs and immigration restrictions has raised red flags regarding the Fed's future autonomy.

Analysts warn that a Hassett nomination could inject volatility into the USD and bond markets, as investors fear monetary policy could become subservient to fiscal dominance. Conversely, a Waller nomination is viewed as a stabilizer for the US Dollar, ensuring a continuity of the “Fed Put” without the risk of politicized hyper-inflation.

Market Implications

The final decision, expected in early 2026, is binary risk event for Forex markets.

• Waller Win: Bullish for Equities, stable USD, lower volatility.
• Hassett Win: Unpredictable USD (potential devaluation pressure), higher long-end Treasury yields due to inflation risk premium.