Ben Bernanke’s term as Federal Reserve Chairman ends this year, and most experts expect him to retire.
For a while, Fed Vice Chair Janet Yellen was considered the clear favourite to fill the vacated seat.
But more recently, for Treasury Secretary Larry Summers has emerged as a frontrunner.
This escalating uncertainty has the U.S. economics team thinking that some of the other candidates are seeing their odds rising.
The politicking for the next Fed Chair has begun in earnest. A revolt by Senate Democrats has likely pricked the Secretary Summers trial balloon candidacy. Governor Yellen remains a viable candidate but, given that Summers was pushed, we also have to assume that the odds of other candidates are on the rise. Our top two alternatives at this juncture are Former Federal Reserve Vice Chair Ferguson and Former Council of Economic Advisors Chair Romer.
Back in May, UBS assigned Ferguson and Romer 14% and 20% probabilities of becoming Fed Chair.
At the time, they gave Summers a < 5% chance.
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