LIVE MARKETS-Why Fed's Waller is leading the race to replace Powell

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WHY FED'S WALLER IS LEADING THE RACE TO REPLACE POWELL

Deutsche Bank is lining up with betting markets and predicting that U.S. President Donald Trump will likely nominate Federal Reserve Governor Christopher Waller to replace Fed Chair Jerome Powell.

In its latest research note, the European bank said Waller has a stronger case among all the Fed candidates because the post of top Fed official not only requires a dovish leaning, but the new chair "would also need to be able to convince his colleagues that less restrictive/more accommodative policy is appropriate." Deutsche writes that Waller fits the bill.

The bank notes that the pitch for lower rates "could be more difficult for candidates who are coming from outside the Fed, particularly if they have been critical of the central bank, such as former Fed Governor Kevin Warsh."

It would also be difficult for those who have had to support economic policies that could raise questions about the Fed's independence, such as Kevin Hassett, director of the National Economic Council, the bank says.

U.S. Treasury Secretary Scott Bessent, meanwhile, has been removed from consideration, as he wants to stay on at the Treasury Department.

Polymarket betting odds on Monday show a 42% chance of Waller being nominated by Trump as Fed Chair, followed by Warsh at 18%.

Bessent is leading a search for a successor to Powell, with an expanded list that includes St. Louis Fed President James Bullard and Marc Sumerlin, a former economic adviser to President George W. Bush.

The Wall Street Journal is now reporting that there are now about 10 contenders for the spot. President Donald Trump last week said he had narrowed the list to four.

(Gertrude Chavez-Dreyfuss)

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