Why is he the most popular candidate for the Fed chairman?

Written by: kkk

At the beginning of August, the personnel situation at the Federal Reserve, which was already tumultuous, suddenly accelerated—Governor Adriana Kugler unexpectedly resigned, and the head of the Bureau of Labor Statistics was personally dismissed by Trump on the day the non-farm payroll data was released. Just as the market was still digesting this personnel upheaval, the White House made it clear: "A decision on the Federal Reserve Chair will be made this weekend." On August 7, sources revealed that as Trump's advisors were searching for Powell's successor, Federal Reserve Governor Christopher Waller was gradually becoming a popular candidate for the Fed Chair position. Trump's advisors were impressed by Waller, as he was willing to base policy on forecasts rather than current data, and he had a deep understanding of the entire Federal Reserve system.

At a recent FOMC meeting, he, along with Governor Michelle Bowman, advocated for an immediate 25 basis point rate cut, becoming one of the two members to "vote against" for the first time in 32 years. This stance aligns with Trump's call for rate cuts and solidifies his position as a "trusted ally of monetary easing" in the political game between the White House and the Federal Reserve.

The competition for the popular candidates for the Federal Reserve Chair

According to reports, President Trump has officially initiated the interview process for the next Chairman of the Federal Reserve, with three core candidates currently locked in: Kevin Hassett, Kevin Warsh, and current Federal Reserve Governor Christopher Waller.

Hassett is currently the Director of the White House National Economic Council and served as the Chairman of the White House Council of Economic Advisers during Trump's first term, being a staunch supporter of his economic policy ideas; Walsh, on the other hand, is a former Federal Reserve governor who participated in addressing the financial crisis during his tenure from 2006 to 2011. Although he is somewhat hawkish, he has maintained a close relationship with Trump and has considerable prestige on Wall Street; Waller is currently the most closely watched candidate in the market. As a current governor of the Federal Reserve, he voted in favor of a rate cut in the latest FOMC meeting, aligning his stance closely with Trump's call for easing.

According to the Federal Reserve appointment rules, the Chairman of the Federal Reserve must be a current board member. The current Chairman Powell's term will end in May 2026, while the term for board members lasts until January 2028—if he chooses to continue serving as a board member after his term ends, Trump's range of candidates for appointing a new Chairman in the future will be limited. Therefore, the recent resignation of board member Adriana Kugler is seen as a critical window, and Trump has now appointed Stephen Miran, the Chairman of the White House Council of Economic Advisers who also calls for interest rate cuts, as a Federal Reserve board member. This move will not only affect the monetary policy path but may also reshape the direction of macroeconomic governance for the remaining time of his term.

Currently, the odds gap among the three candidates on the decentralized prediction market Polymarket is gradually widening: Waller's approval rating has risen to 45%, leading Hassett (27%) and Walsh (19%). The market seems to be betting that this "rule-savvy, dovish" incumbent director could be Trump’s most trusted successor. It is also noteworthy that the newly nominated Federal Reserve director, Milan, has particularly praised Waller, considering him a suitable candidate for Federal Reserve Chair after Powell.

Christopher Waller: A Crypto-Friendly Federal Reserve Governor

Waller was born in Nebraska, USA in 1959. After earning a Bachelor's degree in Economics from the University of Nebraska at Kearney, he pursued his doctorate at Washington State University. He then taught at Indiana University, the University of Kentucky, and the University of Notre Dame, focusing on monetary theory, financial intermediation, and macroeconomic policy. He also researched European integration at the University of Bonn in Germany. In 2009, he joined the Federal Reserve Bank of St. Louis, leading the research department for over a decade and turning the well-known FRED database into a "toolbox" for the global economics community. At the end of 2020, he was nominated by Trump to the Federal Reserve Board and became a voting member of the FOMC, with a term ending in 2030.

Waller's examination of crypto assets has been calm to the point of being harsh from the very beginning. He has compared most cryptocurrencies to "baseball cards" — lacking intrinsic value, with prices dependent on a fragile balance of emotions and confidence. Regarding this highly volatile speculative product, he insists that "the market should bear its own losses," and taxpayers should not have to pay for investment failures.

However, for stablecoins, Waller has shown a different side—a forward-looking selective support. As early as 2021, he publicly pointed out that if there is sound regulation and sufficient reserves, stablecoins can not only reduce payment costs and improve transaction efficiency, but may also become a tool to expand the international use of the dollar and consolidate its status as a reserve currency. At that time, many still viewed stablecoins as accessories to the crypto market, but Waller had already seen their strategic value in the global payment system. Since then, in multiple speeches in 2024 and 2025, he has repeatedly urged Congress to legislate to prevent runs and disruptions in the payment system, allowing stablecoins to truly become a safe 'synthetic dollar.'

In addition, Waller holds a positive attitude towards decentralized finance (DeFi). At the macroeconomic seminar in Vienna in 2024, he traced the reasons for the existence of financial intermediaries from an economic perspective: facilitating transactions, reducing costs, and managing risks. He then turned to DeFi—this model utilizes blockchain, smart contracts, and distributed ledger technology, allowing transactions to occur without traditional intermediaries. He believes that the technology of DeFi can indeed bring efficiency improvements, such as 24/7 instant settlement, automated contract execution, and asset tokenization. However, its core value is more of a complement rather than a replacement for traditional finance. Stablecoins, distributed ledger technology (DLT), and smart contracts—tools originating from the crypto field—can fully support centralized systems and enhance the efficiency and security of traditional markets.

Waller has consistently maintained that innovation should be led by the private sector, and the role of the government is to "build the highway" — clearing infrastructure like FedNow serves as the lanes, while the forces driving the vehicles should be market competition. However, he also warned that if non-bank payment institutions and decentralized platforms lack regulation, they may accumulate leverage and create bubbles, ultimately jeopardizing financial stability.

He is both a skeptic of crypto assets and an early discoverer of the potential of stablecoins; he can analyze the technical and economic logic of DeFi while upholding the Federal Reserve officials' bottom line on system safety. On the balance between innovation and risk, Waller does not attempt to let one side completely overwhelm the other, but insists on drawing a clear and executable boundary between the two—leaving room for growth while not abandoning the responsibility of maintaining the levee.

Waller takes the baton? The Federal Reserve's next move

If Waller ultimately takes over as the Chair of the Federal Reserve, the market may experience a rhythm that is entirely different from Powell's. In terms of monetary policy, Waller, while data-driven, tends to quickly shift to a stance supporting economic growth after inflationary pressures ease. He has repeatedly opposed excessive tightening in the FOMC and has been the first to express support for interest rate cuts when economic data weakens. This flexibility not only helps align with the White House's fiscal stimulus and economic expansion goals but may also allow capital markets to sense a warming of liquidity in advance, indicating a slowdown in the economic cycle.

In the field of cryptocurrency and payment innovation, Waller's appointment may bring a clearer and more predictable regulatory path. He will actively support the promotion of stablecoin legislation, allowing it to integrate into the payment and financial markets under safe and compliant conditions. His recognition of DeFi technology suggests that Wall Street and crypto platforms may gain more policy space in tokenization, smart contracts, and 24/7 settlement. In other words, the Federal Reserve under Waller's leadership may maintain the dollar's dominant position in the global financial system while providing a growth runway for a compliant crypto ecosystem.

From the investors' perspective, such a combination reduces policy uncertainty and releases potential benefits on two tracks: one is the boost in asset prices brought by monetary easing, and the other is the new market opportunities that may arise from the fusion of cryptocurrency and traditional finance.

Summary

However, due to Waller's high coordination with the White House on policy, it has raised concerns among some market participants about the independence of the Federal Reserve. Critics argue that if monetary policy is more influenced by political rhythms at critical moments, it may be difficult for the Federal Reserve to maintain absolute neutrality between inflation pressures and election cycles. This concern resonates not only on Wall Street but also appears in comments from some academics and former officials — they warn that once the market begins to doubt the independence of the Federal Reserve, the cost of its credibility may rise rapidly, affecting the pricing of dollar assets and the flow of international capital.

According to the procedure, even if the president makes a decision to nominate, Waller's appointment still needs to be further reviewed and confirmed by the Senate. This stage not only tests his level of support in Congress but will also serve as a barometer for the market's assessment of policy direction. Before the final announcement is made, investors can only price in based on rumors and interpretations, waiting for the next move from the White House and Congress.