In the early stages of his tenure, the new Federal Reserve Chair, Christopher Waller, is rapidly assembling a core advisory team. He has promoted two long-serving senior economists from within the Fed to serve as advisors, providing policy and analytical support for the institutional reforms he has pledged to advance.
Daniel Covitz, Deputy Director of the Division of Research and Statistics, and Eric Engstrom, Senior Assistant Director of the Division of Monetary Affairs, will take on these advisory roles for Waller.
Both are long-term Federal Reserve employees with deep institutional knowledge, while Waller has committed to a systematic reshaping of the institution.
This appointment is among the first concrete measures implemented since Waller assumed his role last month. He has also brought in two conservative policy veterans from outside the Federal Reserve system and a former White House speechwriter to further bolster his team.
Last week, Waller announced the formation of five specialized task forces to re-examine the Fed's communication methods, data analysis approaches, and portfolio management. These groups will be composed of external experts and supported by relevant internal Fed professionals.
Internal Promotions Follow Established Practice
This appointment is not without precedent. Waller's predecessors also typically selected one or two senior advisors from the existing staff during their initial periods in office.
Covitz has been with the Federal Reserve for nearly three decades, with research spanning financial stability and credit markets. He has a long-standing connection with Waller, having been cited as a contributor in several of Waller's speeches during Waller's previous term as a Fed Governor from 2006 to 2011.
Engstrom specializes in monetary policy and financial market analysis. A model he developed last year indicated that the probability of a "soft landing"—where inflation falls back near 2% while economic growth remains robust—had decreased significantly by mid-2025, partly due to tariff uncertainty, with a corresponding rise in the risk of "mild stagflation."
Joint Research: Supply Shocks and Fiscal Deficits Push Up Interest Rates
In February of this year, Covitz and Engstrom co-authored a research paper exploring why long-term U.S. Treasury yields continued to rise even as the Federal Reserve was lowering its benchmark short-term interest rate.
They argued that the increase in long-term rates primarily stemmed from investors demanding higher risk compensation to account for potential adverse supply shocks—economic disturbances that push up prices and hinder growth—as well as the expanding federal fiscal deficit.
Their research also found no evidence that markets had lost confidence in the Federal Reserve's ability to maintain inflation close to its 2% target.
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