Podcast Summary: Unhedged - "Who Wants to Be a Fed Chair?"
Episode Information:
- Title: Who Wants to Be a Fed Chair?
- Host/Authors: Katie Martin, Robert Armstrong, and other Financial Times market experts
- Release Date: June 24, 2025
Introduction
In the June 24, 2025 episode of Unhedged, hosted by Katie Martin and Robert Armstrong from the Financial Times, the discussion centers around the impending vacancy of the Federal Reserve Chair position. The conversation delves into the potential candidates vying for the role, the current economic climate, and the intricate dynamics between the Federal Reserve and the White House.
The Current Economic Landscape
Robert Armstrong sets the stage by highlighting the volatile geopolitical environment and its impact on financial markets. Referencing recent tensions involving the U.S., Iran, and Israel, Armstrong underscores the uncertainty that surrounds the economic outlook.
"[...] with all that uncertainty and confusion, who on earth would want the responsibility of running the US Central bank, the Federal Reserve, when the top job comes up next spring?" ([00:36])
Overview of Jerome Powell’s Tenure
The hosts discuss Jerome Powell's current role as the Federal Reserve Chair, appointed by former President Donald Trump. Despite recent criticisms from Trump, Armstrong and Martin argue that Powell has adeptly maintained the Fed's independence.
"Powell has been so cool and so measured and so consistent in his communication that the whole back and forth just actually underlines the independence of the Fed under Powell rather than undermining that independence." ([04:20])
They emphasize Powell's ability to withstand presidential pressure, positioning him as a stabilizing figure in tumultuous times.
Potential Candidates for Fed Chair
The episode identifies several key contenders for the Fed Chair position:
- Christopher Waller
- Kevin Warsh
- Kevin Hassett
- Scott Besant
Christopher Waller
Waller is portrayed as a proponent of cutting interest rates, citing slight improvements and potential weaknesses in the labor market as justifications.
"If you look closely at it, it's getting very, very slowly, a very little bit worse depending on how you read the data." ([07:17])
Kevin Warsh
Warsh, a former Fed official who resigned in 2011, is characterized by his critical stance on the Fed's past policies, including excessive quantitative easing and mission creep.
"There's too much quantitative easing from the Fed back in the day... the Fed has lost some credibility and that has generated worse outcomes for our citizens." ([13:06])
Despite his critiques, Warsh remains a strong candidate due to his reputation and experience.
Kevin Hassett
Serving as the Director of the National Economic Council, Hassett is seen as a staunch supporter of Trump's economic policies, particularly tariffs. His alignment with the administration's views positions him as a potential nominee.
"He's a courtier who will kind of parrot whatever the President says." ([16:12])
Scott Besant
Besant, the current Treasury Secretary, is perceived as less dynamic, focusing primarily on articulating the administration's policies rather than proposing his own.
"He's that guy like rolling this policy in glitter and trying to make it look shiny and credible." ([17:30])
Federal Reserve’s Dual Mandate and Policy Implications
A significant portion of the discussion revolves around the Federal Reserve's dual mandate to manage inflation and support employment. The hosts analyze how slight deteriorations in the labor market and gradual improvements in inflation are influencing the debate on whether to cut interest rates.
"We're stuck between its two mandates. And if you ask any Fed chair which mandate is more important, what are you going to, how are you going to prioritize or how are you going to choose?" ([08:20])
Tariff Inflation and Its Impact
The conversation explores the delayed effects of tariffs imposed in previous administrations, questioning whether the anticipated tariff-induced inflation will materialize or if mitigation strategies will keep it in check.
"Maybe tariff inflation won't be as bad as we thought. That's a possibility that has to be reckoned with." ([10:02])
Presidential Influence and Future Outlook
Armstrong offers an unconventional perspective on President Trump's stance, suggesting that Trump might not be as dovish on interest rates as his rhetoric implies, especially in light of past experiences with the Biden administration.
"Trump is probably not as dovish as he sounds." ([14:11])
He posits that Trump's criticisms of Powell may be more about deflecting blame than signaling genuine policy preferences.
Assessing the Contenders
Among the four contenders, Christopher Waller emerges as the frontrunner due to his current role and alignment with the prevailing economic indicators. Meanwhile, Kevin Warsh offers a critical alternative, contrasting with Kevin Hassett and Scott Besant, who are seen as more closely aligned with presidential policies.
"You're not allowed to just say Kevin Waller. You're allowed to say which Kevin you think?" ([19:05])
Armstrong humorously notes potential surprises in the selection process, hinting at Trump's penchant for unexpected appointments.
Long Short Segment
In a lighter segment, Rob Armstrong shares his investment stance:
- Long: Restaurant Inflation
- Observing a rise in restaurant prices as a potential early indicator of inflation trends.
- Short: Gardening
- Katie Martin champions community gardening initiatives, highlighting their personal involvement and the aesthetic contributions to local communities.
Conclusion
The episode concludes with acknowledgments of the production team and a reminder for listeners to engage with future episodes. The discussion encapsulates the complexities of selecting a new Federal Reserve Chair amid economic uncertainties and political pressures, providing listeners with a nuanced understanding of the factors at play.
Notable Quotes:
- "Katie kills wild animals with a single glance. She can mix a martini blindfolded." ([02:24])
- "We're making this up as we go along, but looking very clever doing it." ([09:05])
- "You can't polish a turd, but you can roll it in glitter." ([17:51])
Timestamp Highlights:
- 00:36: Introduction to the episode's main topic.
- 04:20: Discussion on Powell's handling of presidential pressure.
- 07:17: Christopher Waller's stance on interest rates.
- 13:06: Kevin Warsh's critiques of Fed policies.
- 16:12: Kevin Hassett's alignment with presidential policies.
- 19:05: Consideration of candidacies for Fed Chair.
This comprehensive summary captures the essence of the "Who Wants to Be a Fed Chair?" episode of Unhedged, providing insights into the candidates, economic considerations, and the interplay between the Federal Reserve and presidential influence.