Powell is favorite as Trump nears Federal Reserve decision

President Trump is expected to announce his choice to lead the Federal Reserve as soon as this week, potentially reshaping U.S. monetary and financial regulatory policy.

Current Federal Reserve Board Chair Janet Yellen’s term expires next February, and Trump has spoken highly of the incumbent since the president took office in January.

But Republicans eager to break from Yellen’s moderate monetary policy and defense of the Dodd-Frank financial reform law want to see Trump pick a more conservative candidate.

{mosads}Here are the five candidates Trump could choose to lead the Fed beyond February.

Jerome Powell: The frontrunner

Powell — a Fed governor, former Treasury Department undersecretary and investment banker — appears to be Trump’s most likely choice to lead the central bank.

Powell had overseen the Fed’s financial regulatory efforts until the confirmation of Fed governor Randy Quarles, and earned the support of Treasury Secretary Steven Mnuchin though their working relationship.

He’s also the rare Obama appointee that would gain support from Senate Republicans, and had previously been confirmed by a Democrat-controlled Senate. However, he was opposed in 2012 by 20 Republicans, including GOP leaders such as Sens. John Cornyn (Texas) and John Thune (S.D.).

Still, Powell could be Trump’s best bet to reshape key financial regulatory and monetary policy with little Democratic resistance.

Janet Yellen: The incumbent

Trump’s opinion of Yellen has drastically changed over the course of his presidency.

While he accused Yellen of being “obviously political” under President Obama, Trump has praised Yellen’s push behind a slow, steady return to higher interest rates.

Yellen has led the Fed since 2014, presiding over a relatively strong U.S. economy. Employment has lingered below 5 percent, the Fed’s ideal level, for most of her chairmanship, while businesses boast record earnings and the stock market soars.

Presidents have traditionally renominated the Fed chair they inherit from their predecessor, regardless of party, and the economic stability experienced under Yellen helps make a strong case for another term.

Trump has shown little reverence for tradition, but frequently brags about the performance of the stock market under his presidency. Keeping Yellen atop the Fed would likely prevent a shock to markets preparing for drastically different monetary policy. Trump has also reportedly become fond of Yellen, a fellow New Yorker, through his meetings with her.

But few White House aides and GOP leaders share Trump’s fondness for Yellen, an Obama appointee who has fiercely defended the Dodd-Frank Act rules on banks and financial firms.

Replacing Yellen would clear the way for a Republican to help pare back Dodd-Frank rules, and more aggressively bring interest rates back toward historic averages. Senate Republicans have shown little interest in bringing back Yellen, which could weigh on Trump’s decision.

John Taylor: The conservative

Taylor, a Stanford University economist, is the candidate representing the most drastic shift from the Fed’s current policy. Taylor has advocated for a tighter monetary policy with higher interest rates, which could yield more aggressive rate hikes under his leadership.

Taylor has also called for several changes intended to make the Fed’s policymaking efforts more transparent and stable. He’s called for tying Fed interest rate changes to an equation measuring the relationship between inflation and economic growth, which could lead to higher average interest rates.

Trump is reportedly choosing between Powell and Taylor as potential Yellen replacements, and he asked GOP senators on Tuesday which of the two they’d prefer. Few senators responded and most simply smiled at Trump, though both would likely earn their support.

Gary Cohn: The White House official

Cohn, director of the National Economic Council (NEC), was once considered the front-runner to replace Yellen after becoming one of the few Trump aides able to speak frankly to the president and question his views.

But Trump and Cohn’s close relationship soured after the NEC director criticized the president’s response to violent attacks by white supremacists in Charlottesville, Va.

Cohn, who is Jewish, slammed Trump for saying there were “very fine people” among the various white nationalists and neo-Nazi groups that marched in Charlottesville. Trump was reportedly enraged by Cohn’s remarks, and decided against picking him for Fed chair.

Cohn appears unlikely to replace Yellen after his falling out with Trump, and has tamped down rumors of his impending departure from the White House with a public commitment to helping pass a sweeping tax plan.

Even so, Trump is known to change his mind frequently and suddenly, and any delay in the president’s announcement could be beneficial to Cohn’s chances.

Cohn’s views on monetary policy are less defined than Yellen’s, Powell’s and Taylor’s, but the White House aide has backed Trump’s pledge to “dismantle” Dodd-Frank.

Kevin Warsh: The longshot

Warsh, a former Fed governor who was the youngest ever member of the bank’s board, was once considered to be near the top of Trump’s list. Warsh spent nearly a decade at Morgan Stanley and then four years with President George W. Bush before his nomination to Fed in 2006.

Warsh’s 2006 nomination raised eyebrows among Fed watchers given his age and lack of academic experience, but he was confirmed and served on the Fed board during the heat of the financial crisis.

Warsh left the Fed in 2011 and was at one point one of Trump’s top choices.

But Warsh had drawn criticism for his perceived campaigning for the job and has feuded for more than a decade with Quarles, Trump’s first fed appointee. He is no longer considered to be a likely Fed pick for Trump.