Fed Chair Race Takes Sudden Turn: Hassett Hints at Exit, Wach Rise in Odds
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Fed Chair Race Takes Sudden Turn: Hassett Hints at Exit, Wach Rise in Odds
Prediction market data shows that former Federal Reserve Governor Warsh's support rate has surged to 60%, while Hassett has dropped to 16%.
Navigating Web3 tides with focused insightsSource: Jinshi Data
Kevin Hassett, economic adviser at the White House, said that Trump is likely to ask him to stay in his current role, which would remove him from contention for the next Federal Reserve chair.
"From the beginning, he and I have been discussing whether I’m better off in the West Wing or at the Fed," Hassett said on Fox News' "Sunday Report." "I don’t think he’s made a final decision yet."
Last week, Trump expressed reservations about nominating Hassett to succeed current Fed Chair Jerome Powell. At an event in the White House, he told the director of the National Economic Council: "To be honest, I actually hope you stay where you are right now."
Hassett had previously been considered among the top contenders alongside Federal Reserve Governor Christopher Waller, former governor Kevin Warsh, and BlackRock executive Rick Rieder. According to sources familiar with the matter, this is now seen as a four-person race, with Rieder gaining late momentum as some believe he may stand a better chance of winning Senate confirmation.
After Trump’s comments, traders on prediction market platform Kalshi increased the odds of Warsh getting the job to 60%, while assigning only 16% and 14% probabilities to Hassett and Waller respectively. Traders on Polymarket showed a similar dynamic, with Warsh at 60%, Hassett at 15%, and Waller at 13%. Previously, Warsh and Hassett had been neck-and-neck.
"It's unclear if this is a definitive signal—presidents send mixed signals at different times and seem to enjoy the drama of 'Celebrity Apprentice'—but it appears this former Fed governor is now clearly the frontrunner for the first time," wrote Krishna Guha, head of global policy and central bank strategy at Evercore ISI.
A criminal investigation into the Federal Reserve and its chair Powell regarding renovations at the central bank’s headquarters has introduced new uncertainty into the selection process and sparked backlash.
Powell accused the Department of Justice of launching the probe to pressure the central bank into cutting interest rates. Key lawmakers, including Senator Thom Tillis of the Senate Banking Committee, warned that scrutiny of Trump’s nominee would become more intense.
Although Trump claimed to know "nothing" about the investigation, the DOJ’s move—combined with Trump’s relentless pressure on Powell and the Fed to lower rates—has reignited broad market concerns over the central bank’s independence from political interference.
Axios reported on January 12 that Treasury Secretary Bessent had warned Trump the investigation was causing chaos and could harm financial markets.
While Bessent declined to comment on the Axios report during NBC’s "Meet the Press," he pointed to last week’s U.S. Treasury auctions as evidence that "markets are moving beyond this."
Although the U.S. Treasury market saw relatively little movement last week, Treasury yields fell on Tuesday and Wednesday.
Bessent told NBC he was not concerned that the Senate might block Trump’s eventual pick for Fed chair.
"I think we’ll keep moving forward," he said. "I expect we’ll hear soon from the banking committee about what they’d like to see."
Bessent told NBC News that the Senate would be "very satisfied" with any of the four "excellent" candidates under consideration by the Trump administration to replace Powell. He called for greater oversight of the Federal Reserve, noting the institution has the power to print money.
Powell’s term as Fed chair ends on May 15. The selection process is being led by Bessent.
"There are many outstanding candidates, and the president will likely make the right decision that my best place right now is here [in the White House]," Hassett said Sunday regarding the White House.
He said he felt "flattered and grateful" for Trump’s remarks about his future, calling the president "a really good guy."
Trump said he would name Powell’s successor this month but did not provide a specific date.
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