One of Waller's first key appointments: appointing two Federal Reserve economists as advisors, focusing on interest rate research.

New Federal Reserve Chairman Waller quickly assembled a core advisory team in his early tenure, promoting two veteran economists with decades of experience from within the institution to serve as advisors, providing policy and analytical support for his promised institutional reforms.

Nick Timiraos of the “New Fed News Service” wrote that Daniel Covitz, Deputy Director of Research and Statistics, and Eric Engstrom, Senior Assistant Director of the Monetary Affairs Division, will serve as Waller’s advisors.

Both are long-term Federal Reserve employees with deep accumulation in the institution’s operational mechanisms, while Waller is pledging systemic reshaping of the organization.

This appointment is one of the first initiatives implemented since Waller assumed office last month. Waller has also brought in two veteran conservative policy experts and a former White House speechwriter from outside the Fed system, further strengthening his team.

Last week, Waller announced the formation of five special task forces to re-examine the Fed’s communication methods, data analysis approaches, and portfolio management. These task forces will be composed of external experts and supported by specialized staff from within the Federal Reserve.

Internal Promotions, Following Tradition

This appointment is not without precedent. Waller’s predecessors also tended to select one or two senior advisors from existing staff early in their tenure.

Covitz has worked at the Federal Reserve for nearly thirty years, with research spanning financial stability and credit markets. During Waller’s term as a Fed governor from 2006 to 2011, Covitz frequently appeared as a contributor in Waller’s speeches, establishing a deep connection between them.

Engstrom specializes in monetary policy and financial market analysis. The model he built last year showed that the probability of a “soft landing”—inflation falling back to around 2% while economic growth remains robust—had significantly declined by mid-2025, partly affected by tariff uncertainty, with risks of “mild stagflation” on the rise.

Joint Research: Supply Shocks and Fiscal Deficits Pushing Up Long and Short-Term Interest Rates

In February this year, Covitz and Engstrom jointly published a research report exploring why U.S. long-term Treasury yields continued to rise even as the Fed cut its benchmark short-term interest rates.

They believe that the rise in long-term rates mainly stems from investors demanding higher risk premiums to cope with potential adverse supply shocks—economic disturbances that push up prices and hamper growth—as well as the continuously expanding federal fiscal deficit.

Their research also found no signs that markets have lost faith in the Fed’s ability to keep inflation near its 2% target.

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