She says Donald Trump's nomination of Kevin Warsh as the new Fed chief shows he has not managed to reorganize the Fed in the way he wanted.
Warsh can still be seen as someone who will stand up for the Fed's independence to some extent - even though he shares more common views with this administration on many economic policy issues than his predecessor, says Kopelman.
Conservative billionaire
Warsh, a 56-year-old law-trained financier and billionaire, has a conservative view of what central banks should do. But he has also moved from a hawkish stance on interest-rate issues during his years as a board member from 2006 to 2011 to a line that suggests a much lower bar for interest-rate cuts.
Among other things, he has advocated changing the measurement of the Fed's inflation target - which could open the way for more interest-rate cuts.
He would like to look at a different target variable than core PCE, namely "trimmed inflation", where the most extreme outcomes on both sides are removed, says Kopelman.
The "trimmed inflation" measure currently shows significantly lower inflation than core inflation according to the PCE measure.
Warsh has also said that he sees productivity increases with artificial intelligence (AI) as an inflation-reducing factor that could pave the way for interest-rate cuts.
On Wednesday, it is expected - after a tough hearing and a series of votes - that the Senate will finally give the green light for Warsh to take over as chairman of the Fed's board of directors after Jerome Powell.
Better than expected
Kopelman does not believe Warsh as head will mean any dramatic shift in the Fed's interest-rate policy.
"I think the market is rightly less concerned about the Fed's independence now than it was last year. Warsh is only one of twelve members of the board," she says.
Nordea's Chief Economist Annika Winsth agrees.
"Still a little better than one might have feared. There have been other names there that would have been more worrying. And his CV is hard to criticize. It looks very good," she says.
"What is of concern is his family relationships to people who have donated a lot of money to Trump, but also that he is very wealthy and we don't know exactly where that money is," she adds.
However, Winsth expects that Jerome Powell's decision to, against tradition, remain on the Fed's board of directors when he steps down as chairman can stabilize the situation.
Kevin Warsh, now 56, was nominated by President Donald Trump to be the new head of the US Federal Reserve (Fed) in January. Warsh is expected to be confirmed by the Senate on Wednesday to take over as Fed chief when Jerome Powell's term expires on May 15.
Warsh was born on April 13, 1970, in Albany, New York. He studied public policy, economics, and statistics at Stanford University, graduating in 1992. He then received his law degree from Harvard Law School in 1995.
His professional career began as a financial advisor in mergers and acquisitions at the investment bank Morgan Stanley. After a few years at the bank, he was recruited by President George W. Bush in 2002 to work for the government as an economic advisor with a focus on financial markets. He later became the US representative in G20 negotiations and the government's envoy to Asia.
He was elected to the Fed's board of directors in 2006, under Ben Bernanke, where he remained until 2011. He resigned in protest against Bernanke's controversial bond purchases and has since been a partner at Stanley Druckenmiller's investment company, Duquesne Family Office.
Sources: Federal Reserve, The Wall Street Journal
